Mexican peso hits new low after Trump news conference

MEXICO CITY: Mexico’s peso fell to a new low after US Presidentelect Donald Trump vowed to make the country pay for a huge border wall and to tax companies that ship jobs abroad.

The Mexican currency shed 0.9 per cent, trading at 22.20 pesos per dollar after hitting a historic low 22 pesos on Tuesday, according to private bank Citibanamex.

Before the end of trading, the peso went through a rollercoaster ride, hitting 22.25 per dollar at one point.

Trump pledged to forge ahead with plans for a wall on the Mexican border soon after taking office by having the US Congress pay for it first and compelling Mexico to reimburse it later.

“Mexico in some form – and there are many different forms – will reimburse us” for the cost of the wall, said Trump, in his first news conference since winning the November 8 presidential election.

“That will happen – whether it’s a tax or whether it’s a payment.”

Mexican Foreign Minister Luis Videgaray insisted on Tuesday that there is “no way” that his country will pay for any wall, but he signaled that his government was ready to negotiate with the incoming Trump administration.

The peso has fallen since Trump’s election victory as investors fret over his threats to impose tariffs on companies that ship jobs to Mexico and his pledge to renegotiate the North American Free Trade Agreement (NAFTA).

Last week, US automaker Ford scrapped plans for a new US$1.6 billion factory in Mexico that Trump had criticized, though the company said the decision was business-related.

The Republican property tycoon, who succeeds Democrat Barack Obama as president on January 20, last week threatened to impose tariffs on General Motors and Japanese rival Toyota.

Trump repeated on Wednesday that he will impose a ‘major border tax’ on companies that shift jobs abroad.

It is unclear how such a tax might work, but analysts have said the imposition of new tariffs could lead to higher consumer costs, higher production costs and potentially serious trade conflicts with foreign partners. — AFP