Trump tweets of taxes at the southern border and the Peso plunges. Mexico has abundant petroleum, cheap labor and a preeminent location for global companies to reach the largest consumption market in the world. Yet they struggle with slow growth and massive corruption. To add insult to their injurious system, Mexico’s worst nightmare has now been elected next door with a vow to tax Mexico, penalize potentially any factory that locates there and to reverse the tide of illegal immigration. Not surprisingly, the Bearish sentiment is rising over the plight of the Peso as Trump tweets promise to indirectly punish their currency further in 2017. Look for depreciation of the Mexican currency (MXN) down to 23 to 24.4 per dollar (.0435 – .041 dollar/peso) with resistance near 20.
Mexico is clearly one of the most affected followers of Trump Tweets as illustrated in the chart below.
This post was published at FinancialSense on 01/09/2017.