Thursday, January 12, 2017

The Trump Effect: Investors Bolt Mexico as Peso Enters Free Fall

 Brizhnichenko, Creative Commons


As the U.S. continues to be a hot zone for business look for other investors to follow suit. 

Wall Street Journal reports global investors are fleeing Mexico’s financial markets, sending the peso to record lows on mounting concerns that Donald Trump’s trade policy could end the country’s privileged status among developing countries.

The peso on Wednesday tumbled to another all-time low against the dollar as Mr. Trump pledged to change U.S. trade policy with Mexico. “Mexico has taken advantage of the United States,” he said during his press conference. “It’s not going to happen anymore.”

The Mexican currency weakened 0.3%—at 21.8609 from 21.8009 late Tuesday—again frustrating Mexican central-bank efforts to slow the currency’s decline. Bank officials said Tuesday that they spent $2 billion last week to prop up the peso, which has weakened 16% against the dollar since the U.S. election.

The selloff underscores fears that the economic gains Mexico has made over the past two decades could reverse, as the incoming Trump administration takes a confrontational stance that could bring tariffs and border-control measures that once appeared unthinkable.


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