The Mexican peso, which has been pressured since May by Trump’s promises to clamp down on immigration and rethink trade relations, surged as markets trimmed the chances of a victory for the Republican nominee in next month’s elections.
The Mexican currency rose about 2 percent to 18.91 to the U.S. dollar in early Asian trade — its highest level in nearly a month — and held on to the bulk of its gains after the second presidential debate between Trump and Democrat Hillary Clinton.
It last stood at 19.018, still up about 1.5 percent.
The peso is unlikely to break above the trading ranges seen since June, even if more position-squaring takes place, said Wu Mingze, FX trader of global payments for financial services provider INTL FCStone in Singapore.
“A full-unwinding of the ‘Trump Trades’ should only bring us to the levels between the 18.00-19.00 consolidation zone,” he said.
In a video released on Friday, Trump is heard talking on an open microphone in 2005 about groping females and trying to seduce a married woman.
The controversy pitched Trump into the biggest crisis of his 16-month-old campaign and deepened fissures between him and establishment Republicans.
“The Brexit vote has ushered in a new and more dangerous phase for markets in which political developments have a much stronger bearing on sentiment,” said Nicholas Spiro, a partner at London-based consultancy Lauressa Advisory.
“While the Mexican peso — the most liquid emerging market currency and the most reliable gauge of ‘Trump risk’ — has given sterling a run for its money this year, it’s the pound that has become a proxy for politically driven volatility in markets.”
(Additional reporting by Marc Jones in LONDON and Masayuki Kitano in SINGAPORE; Editing by David Goodman)