Peso Plummets Amid U.S. Presidential Election Uncertainty
The Mexican peso has seen increased volatility against the U.S. dollar due to the ongoing U.S. presidential election. Market reactions stem from fears of potential tariffs by Donald Trump, whose Electoral College count exceeds Kamala Harris. Earlier political shifts in Mexico have also contributed to the peso's instability.
The Mexican peso has witnessed a significant drop against the U.S. dollar amid the unfolding results of the U.S. presidential election. The currency dipped to 20.7710 per dollar, marking its weakest position since August 2022, reflecting a 3.2% decrease from its prior closing.
This depreciation is linked to fears that Republican Donald Trump might surpass Democratic contender Kamala Harris. Trump's threat to place additional tariffs on Mexican goods adds to market apprehension, with traders preparing for further currency fluctuations as election results continue to surface.
The peso's current slide echoes the aftermath of Trump's 2016 election win, which saw the currency plummet by 8.5%. While Trump currently holds 230 Electoral College votes compared to Harris's 169, the situation remains fluid as 270 votes are needed for a win, according to Reuters.
Jorge Gonzalez, of Asesores en Divisas y Riesgos, suggests a prolonged period of uncertainty for the peso, with impacts possibly felt during subsequent trading sessions in London and the U.S. Market nerves were previously rattled by Mexico's internal political changes, including a congressional majority that permitted judicial reforms criticized for potentially politicizing the judiciary, thereby unsettling investors.
As of now, the peso has lost approximately 18% of its value against the dollar throughout this year, indicating persistent economic challenges.
(With inputs from agencies.)