Mexican Peso Rallies After US Presidential Debate — Here’s What Else Can Move Its Value

By Jorge Valencia
September 28, 2016
Rodrigo Cervantes/KJZZ
The Mexican peso and the U.S. dollar.

As the Mexican peso soared to its highest rate in weeks following Monday night’s presidential debate, many investors appeared to approve of Hillary Clinton’s performance and send a signal: the Mexican economy would be better off without a Donald Trump presidency.

The peso rose roughly 2.3 percent to 19.44 per dollar within a day, Bloomberg News reported. It appeared Mexico’s currency — seen as a likely victim of Trump’s professed like for trade deals — had emerged as a market proxy for a Trump presidency.

“Certainly, a big change in American trade policy with Mexico would qualify as something that large enough to affect the exchange rate,” said Geoff Smith, an international finance professor at Arizona State University.

Yet economists in Mexico sought to play down the impact a televised debate can have on their country’s currency. A Trump presidency would, by far, make its biggest mark on Mexico, which counts the U.S. as its largest trading partner and sends over three quarters of its exports to its northern neighbor.

But other events, such as Great Britain voting to leave the European Union, or conflict in oil-producing areas of the Middle East have also swayed the value of the peso, said Leticia Armenta Fraire, a business professor at Monterrey Tech in Mexico City.

Elaine Levine, an economics professor at the National Autonomous University of Mexico and a native of Atlanta, had a different perspective: the Mexican currency’s biggest threat isn’t a potentially unfriendly president to the north.

“The real root of Mexico’s problems,” Levine said, “is internal and the way the government has not chosen to devise a conscious plan of development to make the Mexican economy more viable.”

Maybe we won’t confidently know the impact of this campaign until the next administration takes office. Until then, Clinton and Trump are scheduled for two more debates: Oct. 9 in St. Louis and Oct. 19 in Las Vegas.