Trump or Clinton in White House: How the Mexican Peso Could be Toast
Jeff Daniels -
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August 25, 2016

Mexico's currency has been unusually volatile this year, and some attribute it to anti-Mexico and protectionist sentiment raised during this U.S. presidential election season.

"MXN (peso) is the currency most at risk from uncertainty and trade protectionism risks," Morgan Stanley strategist Hans Redeker said in a recent note.

The Mexican peso began under-performing other emerging markets earlier in the year when Republican presidential candidate Donald Trump started to talk more about deportations, ditching trade deals such as the North American Free Trade Agreement. There also was talk about having Mexico pay for a border wall by blocking money transfers, or so-called remittances.

However, this week the New York tycoon appears to be dialing back on some of his earlier hardline anti-immigration stances. He's no longer calling for mass deportations.

"The possibility of a Republican win in the U.S. elections is certainly a factor that triggers weakness of the Mexican peso," said Rafael Amiel, chief Latin American economist at IHS Global Insight. "Expect a lot of volatility because we don't know what will happen."

Amiel added, "Before, the U.S. elections were about immigration — and now immigration is second place in the agenda in the concerns or risk ranks. From the Mexican standpoint, the concern is NAFTA and whether the winner will revise the terms or the whole agreement."

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Related: Mexico Central Bank Concerned About Growth, US Election (Business Recorder)

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