Why has the MExican peso become the election proxy currency? WHy has the peso weakend so substantially on the news of Trump? Looking for the fundamental economic factors.
thanks
I think it’s mostly to do with Trump’s threats to tear up NAFTA which would hurt Mexican exports to the U.S.
It’s ridiculous how the markets react to election promises. How many promises are kept in an election?
Expect MXN to crawl back until ACTUAL measures are taken by the government. This will take years.
they will be broke once they are forced to pay for the wall
Wouldn’t the wall be a huge fiscal stimulus for Mexico and possibly give rise to a whole new border economic zone? I mean, Herbert Hoover got Americans to build a giant damn and name it after him.
i wonder if they will sell ad space on the wall
$$$
Nationalism.
Americans won’t short their own country, so they short Mexico instead. It’s not rational behavior, a form of home bias.
Wrong again! That doesn’t even make sense.
It’s because trade with the US is important to Mexico - much more than Mexican trade is to the US. You need pesos to buy Mexican goods. So, if no one needs Mexican goods, no one needs pesos.
Of course people always have rationalizations for their irrational behavior.
Talking points from Trump himself:
If you operate in the US but then move to Mexico, you will pay a 35% tax on every product you sell into the US.
The Wall. “Who’s going to pay for it? MEXICO! 100%.”
Big one is NAFTA renegotiating. Trade.
7.5% drop in MXN. Where will it go next? No one knows, so don’t waste your time predicting direction.
Yup. Originally there was a market distortion to be exploited; patriotic Americans shorting MX to hedge their naked overvalued US positions. But that is over, I’m not going anywhere near Mexico now, nobody knows the direction, because nobody knows what a impulsive psychopath will do.
Do you have HBO? There is a documentary called “The Wall” that is interesting. It seemed all the stimulus flowed to American interests. Also, the wall seemed to have severe negative impacts on some border towns in Mexico. Now I’m sure Trump’s wall will be better built and thought out, but it is an interesting historical case study.
He will do fine.
Uhhh, I that’s not really an answer to the question.
The OP has a point, shouldn’t it be the Ruble?
Her foreign policy welcomed either no cooperation or war with Russia. She would be a complete disaster for US-Russia relations. All it takes is some extensive research to come to this conclusion. For everyone that did not do research or did research but ignored the facts (e.g. the political “experts” and pollsters) failed to see a Trump win. If Hillary did not try to rig votes at certain counties (in Nevada, Florida, North Carolina, Texas, among others) he would of won with 2-3% more of the popular vote.
For now, short peso and long ruble. There is sanctions slapped on Russia still 2017-2019 so ruble still has downside.