By Noé Torres
MEXICO CITY (Reuters) -The Mexican peso fell against the U.S. dollar as U.S. presidential election results rolled in, continuing a streak of volatility that has hit the currency and others in recent days.
The peso fell for the first time since August 2022 to a low of 20.7080 per dollar, about 3% weaker than the previous session’s close.
Traders are bracing for more swings as the vote count for the hotly contested US presidential election comes in.
The peso’s weakness was seen as traders assessed the possibility that Republican Donald Trump could defeat Democratic candidate Kamala Harris. Trump has promised to impose new tariffs on Mexican exports.
A Trump win could put pressure on the currency to levels around 20.50 pesos per dollar, while a Harris win would likely see it strengthen to around 19 pesos per dollar, said Gerardo Copca, a consulting analyst at MetAnalisis . But if the outcome of the election is contested, volatility would increase, he said.
After Trump’s presidential victory in 2016, the peso plummeted by about 8.5% against the dollar, reaching an all-time low at the time.
Reuters vote counts show Trump has won 207 Electoral College votes so far, compared to 91 for Harris. To win, a candidate needs at least 270 electoral votes.
“Because it is such a close election and the results are coming in late, we will probably see the reality (of the impact on the peso) during trading in London, tomorrow in the US or even the rest of the week,” he said he. says Jorge Gonzalez, head of the consultancy Asesores en Divisas y Riesgos.
Earlier this year, the value of Mexico’s local currency came under pressure after left-wing President Claudia Sheinbaum’s ruling Morena party won a large majority in Congress following June general elections in Latin America’s second-largest economy America.
Majorities in Congress cleared the way for lawmakers to push through a controversial judicial review in September that has sparked market unrest, with some investors questioning the safety of their investments under a more politicized judiciary.
Officials in the United States, by far Mexico’s most important trading partner, have criticized the review.
The peso has lost about 18% of its value against the US dollar so far this year.
