Mexican Peso Recovers After Falling on Clinton News
September 13 2016 - 1:40AM
Dow Jones News
MEXICO CITY—The Mexican peso swooned early Monday on news that
U.S. presidential candidate Hillary Clinton was suffering from
pneumonia, which raised concerns that her rival Donald Trump would
gain in the polls.
But by the close of trading in Mexico City, fundamentals such as
higher oil prices and a less hawkish outlook for U.S. interest
rates helped the currency recover lost ground and close stronger
from Friday.
The peso was quoted in Mexico City at 18.8450 to the dollar,
according to Infosel, compared with 18.8890 Friday. In early trade,
the currency sank to its weakest level against the dollar since
late June, with the rate moving to 19.1870 to the dollar, Banco
Base said in its daily report.
"In the morning, the peso lost ground on news at the weekend
that put into question the health of Hillary Clinton and could
increase voter preferences for Donald Trump... which would
particularly affect the Mexican peso," Banco Base said.
The peso has been sensitive to the Republican candidate's moves
in polls, since a focus of his campaign has included plans to build
a wall on the U.S.-Mexican border to keep out illegal immigrants
and calls to renegotiate terms of the North American Free Trade
Agreement, which he says has benefited Mexico to the detriment of
the U.S.
Mr. Trump's visit to Mexico late last month to meet with Mexican
President Enrique Peñ a Nieto did little to alleviate those
concerns, and was widely seen benefiting the U.S. candidate while
further eroding the already dismal approval ratings of his
host.
It also led to the resignation of Mexico's finance minister, who
while unpopular at home was widely credited by investors with
promoting key economic overhauls of recent years.
"The recent developments have reinforced our conviction on our
under-weight on the Mexican peso, especially in the run up to the
U.S. presidential election," UBS said in a report Monday.
The news of Mrs. Clinton's health and comments from several U.S.
Federal Reserve officials ahead of next week's policy meeting
contributed to the peso's roller-coaster ride Monday.
Higher U.S. interest rates would make dollar investments
relative more attractive, putting Fed moves among principal risks
for the Mexican peso.
Federal Reserve Bank of Atlanta President Dennis Lockhart said
economic conditions warranted a serious discussion on the
possibility of raising interest rates at next week's meeting,
without putting a time on any rate move, while his counterpart at
the Minneapolis Fed, Neel Kashkari, said on CNBC he saw no rush for
the Fed to do anything on the economy. Fed governor Lael Brainard
said there are several reasons for rates to remain steady for a
while longer.
Banco Base noted that the peso-dollar exchange rate has gone
above 19 pesos to the dollar before this year, but failed to hold
for long above that level. Still, "the peso will remain sensitive
to Fed monetary policy and the electoral process in the U.S. for
the remainder of September and October."
Write to Anthony Harrup at anthony.harrup@wsj.com
(END) Dow Jones Newswires
September 13, 2016 01:25 ET (05:25 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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