- Title: Mexico's peso continues to bleed after Trump victory
- Date: 11th November 2016
- Summary: MEXICO CITY, MEXICO (NOVEMBER 11, 2016) (REUTERS) TRAFFIC BANK EXTERIOR SIGNBOARD SHOWING EXCHANGE RATE WITH SEVERAL WORLDWIDE CURRENCIES PEOPLE WALKING IN STREET MORE OF SIGNBOARD SHOWING EXCHANGE RATE
- Embargoed: 26th November 2016 20:34
- Keywords: Mexico peso record low dollar volatile session Donald Trump U.S. election
- Location: MEXICO CITY, MEXICO
- City: MEXICO CITY, MEXICO
- Country: Mexico
- Topics: Currencies/Foreign Exchange Markets,Economic Events
- Reuters ID: LVA0015804X1F
- Aspect Ratio: 16:9
- Story Text: Mexico's beleaguered peso slid to a record low over 21 pesos per dollar on Friday (November 11), then bounced back to around 20.72 in a volatile session, still pressured by Donald Trump's shock U.S. election win.
The peso has become a lightning rod for market anxiety due to fears about the future of Mexican-U.S. trade relations. Trump has vowed to build a border wall between Mexico and the United States, and threatened to rip up the North American Free Trade Agreement.
After weakening nearly 4 percent overnight, the peso pared losses later on Friday.
Trump's presidential win has smashed Mexican assets, which are still reeling after his surprise victory on Tuesday (November 8). Analysts have lowered their forecasts for Mexico's economic performance.
So far, Mexican authorities have declined to intervene to stem the peso's losses, a move most analysts had expected, choosing instead to wait until next week's central bank meeting.
"What we are seeing these days is mainly volatility in all markets, in global markets. Therefore an intervention locally, would have had, today, absolutely no impact. We are ready to make them. We have the instruments and we have the instruments ready to deploy them when we feel that the adjustment will have the best possible impact. It was not in the current juncture where the markets are working," said Finance Minister, Jose Antonio Meade.
Meade said Mexico was trying to get some form of certainty to relations with the U.S.
"We are already working. President Pena Nieto had a first contact yesterday with President-elect Trump to start working in terms of giving certainty to the relationship that is important for Mexico, which is important for the United States and as long as we have news on two sides, how we will coordinate so that the dynamics, competitiveness and integration in North America, Mexico, the United States and Canada continue to report shared prosperity," Meade said.
Nevertheless resident, Carlos Gonzalez, was hopeful.
"For our economy, a different scenario would've definitely been better, but Mexico also has to take advantage of this. Do not forget that in the end, Donald Trump is a businessman and will also see the issue of flow. In other words, if the flow, the issue of imports, exports and everything, well, he will change the economic policies. It seems to me that the free trade agreement is going to continue unless Canada says otherwise, so now we have to wait, we have to wait and see, now it's premature," Gonzalez said.
Merchant Miguel Angel Hernandez, was not so hopeful.
"The truth is that I as a trader, I feel that it affects us a great deal, both in the provisions and all that is translated to the final customer. The impact of the dollar is going up and that prices going up and affects the consumer in the end," Hernandez said.
The peso, the world's worst performing currency this year, took its biggest two-day tumble in more than 20 years following Trump's victory, while Mexican stocks diverged from rallying U.S. equities for a second day on Thursday, losing nearly 5 percent.
Speaking with Bloomberg TV on Friday, the Banco de Mexico's Deputy Governor Manuel Sanchez said the peso depreciation's pass-through to inflation had so far been mild, an impact he attributed to monetary policy.
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