Published On: Mon, Aug 15th, 2016

Trump’s bid could be bad for the peso

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MEXICO CITY—Mexican-peso traders long used to watching out for anything from oil prices to U.S. payrolls now have one more thing to consider: polls showing who is ahead in the race for the White House.

A spate of recent surveys showing Democratic candidate Hillary Clinton ahead of Republican Donald Trump coincided with the peso reaching its strongest level against the U.S. dollar since the end of June, when the Bank of Mexico raised interest rates by an unexpected half-percentage point. Some traders and analysts said those polls contributed to the peso’s gains, according to the Wall Street Journal.

“The peso is rallying and, more importantly, it has more room to appreciate as Hillary Clinton continues to climb in the polls—gaining ground on Donald Trump, who has proposed policies that could potentially hurt Mexico’s economy,” Nomura Latin America strategist Benito Berber said in a note to clients on Tuesday. Although things could change between now and November, “the fact remains that the gap favoring Clinton has widened recently and that should be supportive for the peso,” Mr. Berber said.

The peso ended trading in Mexico City on Friday Aug. 12 at about 18.245 to the U.S. dollar, compared with 18.90 a week earlier. It remained down nearly 6% so far this year.
Mr. Trump’s bid for the White House has put an unusual spotlight on Mexico.

The Republican nominee has said he would build a wall along the border between the U.S. and Mexico to keep out illegal immigrants; kick out illegal immigrants already in the U.S.; and make Mexico pay for the wall by restricting money transfers home by Mexicans working in the U.S., imposing trade tariffs or raising visa fees. He also has said he would renegotiate terms of the North American Free Trade Agreement, or abandon it.

(PHOTO: cnn.com)

(PHOTO: cnn.com)



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Source: wsj.com

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