While most currencies, including equities, reversed course after the election was over, the Mexican peso has not followed suit. The USD/MXN exchange rate spiked 14% percent in the space of four hours on election night to an all-time high of 20.78!
This is the biggest drop in the peso since the currency crisis in 1994, when newly inaugurated President of Mexico, Ernesto Zedillo, announced that the Mexican central bank would be devaluing the currency about 15 percent.
Trump’s comments during the campaign regarding the dismantling of NAFTA agreements between the United States and Mexico, in addition to taxing migrants’ remittances back to Mexico to raise money for a mega-wall on the southern border, have sparked fears among analysts about the future prospects of the Mexican economy and currency.
Gabriela Siller, an analyst at Mexican bank BASE, said that very hard times are in store for the Mexican economy, according to a Reuters report.
Trump’s victory speech had a much softer tone and the Mexican peso pared some of the losses, dropping down to 19.8. However, USD/MXN spiked again today and the pair is now trading just underneath the all-time high, grinding away near 20.50!