Mexico’s peso was narrowly weaker on Wednesday, November 6th, after largely recovering from a slump earlier in the day to its lowest level in more than two years, as analysts said the slide in response to Donald Trump’s U.S. election victory was overdone.
While the U.S. election extended a streak of volatility and weakness for emerging markets, Mexico was seen as particularly vulnerable given its exposure to the U.S. economy, its biggest export market.
The peso weakened 0.4% at 1436 ET, trading at 20.2048 per dollar, after dropping in early trading as low as 20.8100 per dollar for the first time since August 2022, a fall some analysts said may have been overdone.
“I think some of it was priced in the currency already, though there are big domestic factors impacting (the peso) as well,” said Shamaila Khan, head of fixed income for emerging markets and Asia Pacific at UBS Asset Management.
“Volatility could be both ways because when you have a supermajority, there are a lot of good things the government can do as well,” Khan added, referring to the political strength of the country’s ruling Morena coalition.
Emerging market currencies have shown mixed behavior against a soaring dollar, with the Brazilian real gaining over 1% and Chile’s peso chalking up the biggest losses in Latin America.
The Mexican peso has shed over 18% of its value so far this year against the U.S. dollar, posting sharp setbacks after Mexico’s election in the summer roiled domestic assets.
Rodolfo Ramos, head of Mexico research at Brazilian bank Bradesco, said a Trump administration was not an unknown and this was now “an attractive entry point” for investors.
“Mexico has already worked with him successfully,” he said in a note to clients. “We see uncertainty on tariffs in the short term, but we remain positive on nearshoring over the medium and long run.”
After Trump’s 2016 presidential victory, the peso plummeted around 8.5% against the dollar to a then-historic low.
While markets evaluate the effects of trade barriers Trump has threatened, Mexican President Claudia Sheinbaum tried to play down concerns about a drastic rupture.
TYT Newsroom
