Mexican peso hits record low before Fed decision

By Nancy Caouette

MEXICO CITY (AA) – The Mexican peso hit new records lows Wednesday on worries of a possible U.S. Federal Reserve interest rate hike and the potential for Donald Trump to become the next American president.

As the Mexican Bolsa stock exchanged opened, the peso traded at 19.79 per dollar but was sold above the psychological barrier of 20 pesos at several Mexican banks, reaching a new record low of 20.27 pesos per dollar at Bancomer, one of the country’s largest banks.

The Fed announced in the afternoon that it was keeping the key federal interest rate unchanged, but it was too early for the development to reflect further on Mexican markets.

Finance Secretary Jose Antonio Meades aid the Mexican economy would not be effected by the plunging peso thanks to the country’s low inflation and steady job creation.

“Mexicans should remain calm. The Mexican economy grows and generates jobs. Inflation is controlled so long-term expectations are well anchored,” Meade told a local television station.

He tried to quell fears ahead of the Fed’s decision, suggesting that regardless of the ruling by the U.S. central bank, Mexico would see minimal change.

"The decision of the Fed to keep rates unchanged or not is likely to have some impact in Mexico," he said, adding that there would be a meeting next week to evaluate the situation.

Banamex bank analysts said in a note Tuesday the Bank of Mexico would probably raise rates by 75 basis points next week to contain the peso’s depreciation.

The peso has fallen more than 5 percent in September, in no small part as polls indicate an increasing chance Donald Trump could win the U.S. presidential elections in November, according to analysts.

During his campaign, Trump has promised to deport approximately 11 million undocumented immigrants – mostly Mexicans.

He also stressed that if elected he would revise or repeal the North American Free Trade Agreement (NAFTA), an agreement on which the Mexican economy heavily relies.