Mexico’s peso hit a new record low on Wednesday, falling more than 1.5 percent amid ongoing uncertainty over U.S. President-elect Donald Trump’s eventual policies and in anticipation of an address by the Mexican president.
The peso MXN= MXN=D2 dropped as low as 21.4750 per dollar, after pushing past the previous low of 21.395 per greenback set on Nov. 11, soon after Trump’s surprise Nov. 8 election victory. It later pared losses slightly.
On Tuesday, the peso was rocked by Ford Motor Co.’s decision to cancel a planned $1.6 billion investment in central Mexico, while fears over inflation have been stirred by a major fuel price hike that took effect on Jan. 1.
“With this Ford announcement, markets are clearly seeing the risk of protectionist measures toward Mexico,” said Juan Carlos Alderete, a strategist at Banorte-IXE.
“A scenario in which Trump is very aggressive in terms of policies toward Mexico is not yet priced into the market, and the Ford announcement reflects that,” he added.
Trump’s election win drove the Mexican currency lower amid a sell-off fueled by his threats to scrap a trade deal between Mexico and the United States, and to levy punitive tariffs on Mexican-made goods.
He railed against Mexico on the campaign trail, threatening to halt transfers from Mexican nationals in the United States unless Mexico agreed to pay for the massive wall he has vowed to build on the U.S. southern border to keep out illegal immigrants.
The Mexican fuel price increase stemmed from the finance ministry’s decision to put an end to government-set prices, but the size pf the rises also spurred some protests in Mexico, prompting speculation that the government could seek to stagger the increase.
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So far, officials have ruled out any such move.
President Enrique Pena Nitro was expected to speak at noon local time, prompting traders to speculate on what he might say.
(Writing by Dave Graham; Editing by Simon Gardner and Alistair Bell)