by Noe Torres
MEXICO CITY (Reuters) – The Mexican peso fell against the U.S. dollar as U.S. presidential election results came in, extending a streak of volatility that has not only hit the currency but also other countries in recent days.
For the first time since August 2022, the peso fell to 20.7080 per dollar, about 3% weaker than the previous session’s closing price.
Traders are bracing for more swings as votes are counted in the hotly contested U.S. presidential election.
The peso’s weakness was seen as investors pricing in the possibility of Republican Donald Trump defeating Democratic candidate Kamala Harris. Trump announced the imposition of recent tariffs on Mexican exports.
According to Gerardo Copca, an analyst at consultancy MetAnalisis, a Trump victory could put pressure on the currency to around 20.50 pesos per dollar, while a Harris victory would likely lead to a strengthening of the currency to around 19 pesos per dollar. However, if the election result is questioned, the instability of the situation will deepen, he added.
After Trump’s presidential victory in 2016, the peso fell about 8.5% against the dollar, reaching a historic low at the time.
Reuters vote tallies show Trump has so far won 207 Electoral College votes to 91 for Harris. To win, a candidate needs at least 270 electoral votes.
“Since the election is very close and the results will be known slowly, we will likely see the reality (impact on the peso) during trading in London, tomorrow in the US or even throughout the rest of the week,” he added. said Jorge Gonzalez, who heads the consulting firm Asesores en Divisas y Riesgos.
Earlier this year, the value of Mexico’s local currency fell after leftist President Claudia Sheinbaum’s ruling Morena party secured a huge majority in Congress following June general elections in Latin America’s second-largest economy.
Congressional majorities cleared the way for lawmakers to pass a controversial judiciary change in September that caused market volatility and some investors to doubt the security of their investments in a more politicized judiciary.
Officials in the United States, by far Mexico’s largest trading partner, have criticized the renovation.
The peso has lost about 18% of its value against the US dollar this year.
