All the factors that have played a role in the recent depreciation of the peso such as the U.S. presidential election, low oil prices, government spending cuts, lower credit ratings, higher inflation, and higher borrowing rates still leave room for fluctuations. Over the next 12 months we could see a continued depreciation if President Trump will be as harsh as he claimed. If he cracks down on illegal immigration, renegotiates NAFTA and free-trade deals, and “builds a wall” the peso will continue to depreciate even more. However, if these policies are not put into place and we see unity between these countries the currency may start to recover. Also, with the new hedging Mexico is implementing with oil and the raising of the prices we may see the Mexican Peso appreciate because as oil becomes pricier it will generate more revenue for the Mexican economy. According to Juan Carlos Rodado, the director of Latin America research at Natixis North America and the most-accurate forecaster in the third quarter, “Trump’s first 100 days in office will be key to understanding what his rhetoric will be like” (Cota). As a result, the Mexican Peso and economy remains risky for investors, as there are still too many uncertainties about where the value of the peso will
All the factors that have played a role in the recent depreciation of the peso such as the U.S. presidential election, low oil prices, government spending cuts, lower credit ratings, higher inflation, and higher borrowing rates still leave room for fluctuations. Over the next 12 months we could see a continued depreciation if President Trump will be as harsh as he claimed. If he cracks down on illegal immigration, renegotiates NAFTA and free-trade deals, and “builds a wall” the peso will continue to depreciate even more. However, if these policies are not put into place and we see unity between these countries the currency may start to recover. Also, with the new hedging Mexico is implementing with oil and the raising of the prices we may see the Mexican Peso appreciate because as oil becomes pricier it will generate more revenue for the Mexican economy. According to Juan Carlos Rodado, the director of Latin America research at Natixis North America and the most-accurate forecaster in the third quarter, “Trump’s first 100 days in office will be key to understanding what his rhetoric will be like” (Cota). As a result, the Mexican Peso and economy remains risky for investors, as there are still too many uncertainties about where the value of the peso will