Peso Pressures: Trump's Influence on Mexico's Currency Rollercoaster

Mexico's currency, the peso, plummeted to its weakest point in two years, driven by markets anticipating Donald Trump's victory in the U.S. elections. The peso dropped as much as 3%, stirring concerns of trade barriers and USMCA renegotiations under a potential Trump presidency, impacting emerging markets significantly.

In a stark display of market volatility, Mexico's peso severely weakened, hitting its lowest point in over two years amid speculation of Donald Trump's success in the U.S. elections. The currency plummeted more than 3% in early trading, marking its steepest decline since Mexico's summer election turmoil. The peso later retraced some of its losses, settling at 20.6260 per dollar.

As emerging market currencies largely buckled against the dollar, the peso emerged as one of the biggest losers. Chris Turner at ING highlighted the high volatility undermining carry trades, with the possibility of the peso sliding further towards 22.00 in the coming weeks.

Trump's 2016 victory saw the peso dive by 8.5%, hitting historic lows. As the dollar index surged, driven by potential Republican wins, concerns loomed about trade barriers under a Trump presidency. A re-examination of the USMCA in 2026 could herald challenging times for the peso, according to financial experts. Central banks might intervene to stabilize markets, as geopolitical tensions and remittance flows remain significant pressure points.

(With inputs from agencies.)