Monday, January 30, 2017

The Mexican Peso Problem

The Mexican peso started falling after Donald Trump's election but has rebounded for three days. In fact, investors are starting to look at the peso as a good bet. The idea is that the United States and Mexico will eventually get things sorted out and that the foundation of the Mexican economy is solid.

The flip side of this is the notion that this instability will undermine economic growth, which in turn will hurt the currency. Statements by Trump or Enrique Peña Nieto (not to mention Carlos Slim) make the peso bounce around. Last year the peso moved according to whether Trump seemed to be losing in debates.

The big question is whether long-term stability is even possible with Trump, who changes his mind constantly.


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