The Mexican 'Contingency Plan' for Trump Isn't Working Patrick Gillespie - CNNMoney
go to original January 6, 2017

Trump Tells Toyota Not to Build Plant in Mexico (Bloomberg Politics)

Mexico's "contingency plan" to protect its economy from the "hurricane" effect of Donald Trump's electoral victory isn't working.

On Thursday, Mexico's central bank tried to prop up its battered currency, the peso, by selling dollars to international investors. It's the latest move by Mexico to stop the peso's bleeding from Trump's threats to use tariffs, build a wall and tear up a trade deal.

Mexico's peso briefly shot up on the news of the central bank's rescue attempt. But by the end of Thursday the gains were gone.

Reuters reported that the central bank, known as Banxico, sold $1 billion Thursday, but a central bank spokesperson said it wouldn't publish official figures until next week.

One dollar equals 21.50 pesos. A year ago a dollar was worth nearly 18 pesos. It could fall further this year, possibly causing a flight of cash out of Mexico, experts say.

"Imagine if you have a trade war: The peso can go from 21 to 25," says Alberto Ramos, head of Latin America economic research at Goldman Sachs. Pulling money out of Mexico "may create some very destabilizing dynamics for the Mexican economy."

Central bank president Agustin Carstens, who described Trump as a "hurricane" for Mexico's economy, said before the election Mexico had a "contingency plan" ready if Trump won.

Read the rest at KFGO

Related: Mexico Central Bank Confirms Second Forex Intervention, Sells Dollars in Asian Trade (Reuters)

Related: You Do Realize That if You Keep All the Jobs in America, the Mexicans Will Return? (Reason)

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