Mexico’s peso in free fall after Trump’s election

By Nancy Caouette

MEXICO CITY (AA) – The Mexican peso plunged further Monday on worries about the effect of policies by U.S. President-elect Donald Trump could have on the country’s economy.

The currency traded at 20.87 per dollar early Monday -- 0.05 percent lower than the previous day.

The peso served as a barometer during the U.S. presidential election, falling when polls indicated Trump was improving and rising as Hillary was gained support.

After Trump’s victory, however, the peso suffered its worst performance in two decades, hitting three record lows last week.

The currency traded at 21.15 per dollar Friday, a record low with an 8.75 percent loss in seven days.

In an attempt to calm anxiety, Finance Minister Jose Antonio Meade and central bank governor Agustin Carstens said last week they collaborated on a “contingency plan” in recent weeks but did not provide any immediate steps to support the peso. ''The government of the republic and the Bank of Mexico will take the necessary measures in a coordinated manner in order to maintain the proper functioning of markets," Meade said at a news conference.

“Mexico has lived through challenges of volatility in the past that we faced with unity, seizing on our economic strength and taking correct and prudent policy decisions, and this won't be an exception," he added.

The central bank chose not to intervene too soon after Trump’s victory but it could raise interest rates Thursday for the fourth time this year, according to several analysts.

“Markets seem to pick on the Mexican currency and the reason for this is quite simple: the investor thinks the country most affected by the policies on trade and migration announced by Trump is Mexico,” according to analysis published Monday by private Mexican bank CI Banco.

Trump has threatened to rewrite or scrap the North American Free Trade Agreement, or NAFTA arguing “it has been a far greater benefit to Mexico” than the U.S.

He also claimed he would impose 35 percent tariffs on products such as cars made in Mexico.