Today’s News
The Mexican peso dropped sharply against the U.S. dollar as results from the U.S. presidential election began to emerge, deepening the volatility that has recently impacted the currency. On Tuesday evening, the peso fell to as low as 20.5260 per dollar, down over 2% from its previous close and hitting its lowest level since September 2022.
Image Source: Los Angeles Times
Peso Responds to U.S. Election Tensions with Potential Tariff Risks
Earlier in the day, the peso had been trading around similar levels but saw some recovery before sliding back again as the election updates came in. Market watchers are now bracing for further fluctuations as the hotly contested U.S. presidential race unfolds.
Traders have priced in the potential for heightened volatility, especially if Republican Donald Trump prevails over Democratic candidate Kamala Harris. Trump has indicated plans to introduce new tariffs on Mexican exports, which could further pressure the peso.
According to Gerardo Copca, an analyst at MetAnalisis consultancy, the peso could weaken to around 20.50 per dollar if Trump wins, while a Harris victory might see it strengthen to around 19 pesos per dollar. However, if the election result is disputed, the peso is likely to experience even greater volatility.
Following Trump’s 2016 election win, the peso dropped by approximately 8.5% against the dollar, reaching a then-record low. Currently, Reuters reports Trump leading with 154 Electoral College votes against 30 for Harris, although a candidate needs 270 to secure the presidency.
“With the election running so close and results trickling in slowly, the real impact on the peso may become evident during the London trading session or even later in the week in the U.S.,” commented Jorge Gonzalez, head of the consultancy Asesores en Divisas y Riesgos.
Image Source: Bloomberg
This year, the peso’s value has already faced challenges after Mexico’s ruling Morena party, led by President Claudia Sheinbaum, secured a strong congressional majority in June. That majority paved the way for a judicial overhaul in September, sparking market concerns over the stability of foreign investments under a potentially more politicized judiciary in Mexico.
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