Peso takes a beating
Global investors are seriously worried about Mexico.
The election of Donald Trump has caused investors to bet heavily against Mexico, its currency and Mexican companies. They worry that Trump’s plans to build a wall along the border, throw out undocumented immigrants and renegotiate trade agreements will damage the country’s economy.
The peso has fallen 8 percent this week to roughly 20 pesos to the dollar, its lowest value in history. In comparison, the peso traded at roughly 13.50 pesos to the dollar two years ago, well before Trump announced his candidacy. The stock market in Mexico has fallen nearly 4 percent just in November. Investors are betting that a Trump Administration will renegotiate large parts of the North American Free Trade Agreement, approved in the 1990s. NAFTA allows most goods to pass between Mexico, the U.S. and Canada freely. Several companies have operations in Mexico to take advantage of cheaper labor, for example automakers. There are also concerns that Trump’s deportation of millions of undocumented immigrants will cause remittances to Mexico to dry up.