Mexican peso hit by ‘Trump factor’
MEXICO CITY: Donald Trump has angered Mexicans with his antiimmigrant rhetoric and caused political headaches for their president. Now the White House hopeful is partly blamed for the national currency’s free fall.
The currency dropped to a record 20 pesos to the dollar on Monday, a 2.15% fall from last week when it closed at 19.57, according to banking firm Banamex.
Fears over a possible interest rate hike by the US Federal Reserve are cited as a key factor for the peso’s drop, although analysts now believe the Fed will keep it unchanged when it meets for two days starting yesterday.
But analysts also point to concerns over Trump’s chances in the US election against Democratic candidate Hillary Clinton after recent polls showed a tight race ahead of the Nov 8 election.
“This ‘Trump effect’ causes much concern for Mexico’s future,” Raul Feliz, analyst at the Centre for Economic Research and Teaching think thank in Mexico City, told AFP.
Feliz cited Trump’s threat to deport millions of undocumented migrants from the US, renegotiate a trilateral free trade deal with Mexico and Canada, and make Mexico pay for a giant border wall.
“This would have a very negative impact and, facing this anxiety, investors are taking shelter behind the dollar,” the analyst said.
The real estate tycoon has threatened to cut off billions of dollars sent home by Mexican immigrants in order to force their homeland to pay for the wall.
Remittances are among Mexico’s main sources of revenue along with oil, tourism and exports.
“There is also fear of less currency coming in because of Trump’s threat to freeze remittances,” said Raymundo Tenorio Aguilar, director of economic studies at the Monterrey Institute of Technology.
Finance Minister Jose Antonio Meade has suggested that the US election, in general, is playing a role against the peso.
“We are not sure that it is an issue linked to Trump or not,” Meade said, adding that it could be due to “the doubts that are always generated by the possible result of the election in the country that is our main trade partner”.