The negative behavior of mexican peso last week largely reflected what a possible victory for donald trump in the United States presidential election next November 5, consider CIBanco.
The financial firm explains that in previous weeks, there had been relative calm in global financial markets around the events of the US presidential race. However, as the choice between Donald Trump and Kamala Harrisgrows uncertainty about a second term for the Republican.
“Although the race looks very close, in terms of betting with odds of 50 percent of a victory for either of the two candidates, in recent days in the betting markets and in more recent surveys, the participants They seem to lean a little more towards Trump as the winner”, highlights the firm.
In his analysis titled Is Trump the favorite? The Mexican peso begins to incorporate this possibilityCIBanco points out that a Harris presidency would probably look much more like the current scenario, and that in the event of a Trump victory, most of its more radical political proposals they would end up being delayed and/or watered down.
In addition, he adds that it will also depend on the outcome of the election in the US Congress, especially if it ends with the control of both cameras.
Regardless of this, CIBanco points out, “the market generally anticipates the facts and therefore the new valuations of risk assets, with increases in volatility.”
Trump’s proposals that could weaken the Mexican peso
The commercial banking institution mentions that Trump has presented a political platform that includes several radical proposals with important economic and social implications. financial markets.
“If fully implemented, we believe that, on net, they would result in weaker growth, higher inflation and one Fed policy something more restrictive.”, explains the firm.
Those of greatest concern, he details, are his initiatives regarding trade policy, among them, the application of strong tariffs on all importsnot only to countries with which there is a certain rivalry such as Chinabut to important trading partners like Mexico.
“His rhetoric talks about unlikely topics such as tariffs of up to 300 percent to Chinese vehicles produced in Mexico (currently not produced)”, indicates CIBanco.
Likewise, his position on a renegotiation of the T-MEC and not a review like the one scheduled for 2026. In this sense, the financial firm recognizes that a renegotiation of the trilateral agreement “would put at risk the progress made in previous years and the possibility of including new restrictive measures due to protectionist ideas.”
Finally, he maintains that the concern about the Mexican currency could continue until election day, causing episodes of volatility and pressure on weight.
“Although the economic figures in the USA, particularly employment and PCE that will be known before the result, along with the geopolitical issue of the war in the Middle East, could influence the behavior of the peso at times, the electoral process in the USA will dominate the scene in the next two weeks.”, he concludes in his analysis.
