Mexico peso dips as Trump homes in on American presidency
On Wednesday, Mexico's peso slumped to its lowest-ever levels as American Republican Donald Trump led in the major battleground state of Florida and alos had an edge in a clutch of other states, thus driving market participants to contemplate that Trump could probably become the next U.S. president.
Worries of a Trump victory weighed greatly on the peso for months on his threats to rip up a free trade agreement with Mexico as well as tax money sent home by migrants to pay for building a wall on the southern American border.
The peso sank by more than 13% on Tuesday after-market trading for Mexico and on Wednesday during Asia trade it broke past 20 pesos per greenback – the greatest intraday dip in at least 19 years.
A Trump-inspired peso dip could push Mexico's major bank to increase interest rates or even directly intervene in forex markets for the purpose of stemming the bleed.
The major bank has already raised its rate three times this year, increasing it to about 4.75% in order to anchor inflation expectations following a steep depreciation of the peso.