Tumbling peso takes toll on Mexican businesses

Global Business

The Mexican peso has lost almost half its value since 2014, but there are signs it’s starting to rebound.

What are the factors behind the drop and how might the U.S. election play a role in a comeback? And what does a struggling peso mean for local Mexican businesses.

CCTV America’s Martin Markovits reports.
Follow Martin Markovits on Twitter @MartinMarkovits

Mexico’s battered peso got a boost after Sunday night’s U.S. presidential debate between Hillary Clinton and Donald Trump.

Investors have been cautiously watching the ups and downs of the political campaign as the two candidates slug it out.

After hovering close to a record low of 20 pesos to the dollar, the peso jumped more than 2 percent to a one-month high.

This is giving some relief to Mexico’s stock market. But it’s still weak compared to just two years ago when its value was worth almost 50 percent more. Hardest hit are Mexican companies which rely on U.S. imports.

Many factors are to blame for the dramatic drop in Mexico’s currency. Most is the fall in global oil prices. But it may be the U.S. presidential election that has had the biggest influence.

The United States is Mexico’s main trading partner. Donald Trump’s platform to build a wall and enact more trade restrictions with Mexico has worried investors there.

Some analysts expect the value of the peso will change again depending on who wins in November.

But there is a silver lining of sorts to the weak peso. The second biggest source of foreign income for Mexicans comes from remittances sent from family members living in the U.S. For these families, a strong dollar means more pesos are now being sent back home.


Ruben Olmos on the reason for the recent tumble in the peso

To help explain the reasons behind the pesos recent tumble, CCTV America’s Jessica Stone spoke to Ruben Olmos, managing Partner at Global Nexus, LLC.