Slip slidin’ away

INVESTORS in Mexico were among those cheered by Hillary Clinton’s strong performance in the American presidential debate on September 26th. The country’s ailing peso has lost 12% of its value against the dollar this year. But either side of Mrs Clinton’s first joust with Donald Trump it climbed by 2%.

The link between the peso and Mr Trump’s chances of becoming president seems clear enough. The Republican has talked loudly about withdrawing from the North American Free Trade Agreement, raising tariffs on Mexican imports and taxing remittances. How realistic any of this is, and what effect it would have on the Mexican economy, is unclear. But his hawkish trade policy gives investors plenty to worry about.

The peso is a highly liquid currency frequently used to hedge against exposure to global risk. It fell sharply after Britons voted in June to leave the EU, even though Mexico and Britain do little trade. It is now being used as a hedge against the possible turmoil of a Trump presidency. “The peso is seen as the purest proxy for the American election,” says Andrés Jaime of Barclays Capital.

The peso’s descent...

via The Economist: Finance and economics Business Feeds

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