Mexican Peso Research Paper

1456 Words 6 Pages
After several months of uncertainty, the Mexican Peso still remains under heavy pressure. The question is, will Mexico’s economy be able to recover? Unfortunately, the Mexican currency remains far away from recovery after Donald Trump became the next United States president. Depicted in the graph below, it is evident that over the past few months as Trump gained more support the peso was negatively affected and depreciated as his poll numbers improved. The peso has shown a high negative correlation with a potential Republic win (Cota). With Donald Trumps’ victory we have seen the negative correlation in full effect. A 13% fall in one trading day resulted from the election, the U.S. dollars to pesos was 18.3 on November 8th and fell to 20.7 …show more content…
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

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