“Most of what’s driving the peso today is [still]policy, what you might hear [at]the Trump press conference,” Jason Leinwand, founder and CEO of currency trading advisory firm FirstLine FX, told CNBC. “There’s still a lot of concern in markets about the U.S.-Mexico relationship going forward, a lot of concern about NAFTA.”
The peso also tried to stage a brief rally on speculation that the Mexican central bank would intervene and support the currency. Leinwand, though, expected weakness in the peso should persist despite the Mexican central bank’s intervention efforts and expected interest rate hikes.
Markets now anticipate the President-elect could take a more protectionist stance that would weigh on the Mexican economy.
“You think you are going to move your plant…move it to Mexico,” Trump said. “It’s not going to happen. You are going to pay a very large border tax…There will be a major border tax on these companies that are leaving and getting away with murder.”
For more information on the Mexican markets, visit our Mexico category.