I posted on Monday on the Trump/peso index, since a Mexican currency analyst found that the peso declines as Trump’s odds for POTUS rise. Yesterday the WSJ picked up the story:
Mexican Peso Recovers After Falling on Clinton News. Higher oil prices and less hawkish outlook for U.S. interest rates helped peso recover lost ground
The news of Mrs. Clinton’s health and comments from several U.S. Federal Reserve officials ahead of next week’s policy meeting contributed to the peso’s roller-coaster ride Monday.
Higher U.S. interest rates would make dollar investments relative more attractive, putting Fed moves among principal risks for the Mexican peso.
Silvio Canto posits,
Is the Mexican peso a poll about the U.S. election? I don’t think so. It is a statement on concerns about the Mexican economy, such as low oil prices. It is also about exports and having a peso that helps Mexican exporters. That was the consensus of an economic summary that I read a few months ago.
Trump causing a weakening of the Mexico peso? I don’t think so and pray that it is not so. Mexico has been floating its peso since the late 1990s and it’s been good for both sides. Again, I saw a Mexican peso devaluation first hand and it was not fun, even if I went out that weekend and bought some nice business suits suddenly cheaper in dollars!
If Trump wins, it’ll be interesting to see if he’ll push for a renegotiation of the North American Free Trade Agreement, a point Peña Nieto agreed on.
Post re-edited to add missing HTML