Mexico’s peso a bellwether of Trump’s chances

As sterling’s decline against the euro and the dollar on the back of Brexit grabs the headlines in these parts, another exchange rate has become the key indicator of financial market betting on the other most important geopolitical event this year: Mexico’s peso.

The peso, possibly the most exposed currency to a Trump victory in the US presidential elections, has fallen by more than 9 per cent this year against the dollar.

With Trump pledging to build a wall on the US’s border with Mexico and scrap a trade deal with the central American country and Canada if elected, it’s little wonder the peso has become a way for currency traders to place wagers on the property tycoon’s chances of making it to the White House.

To put in context, while about 16 per cent of Irish exports go to the UK (down from 55 per cent in 1974, when both countries joined the European Economic Community), almost 80 per cent of all Mexico’s exports go to the US.

Traders have been sure to give their two cents' worth after the Washington Post uploaded a piece of 11-year-old footage over the weekend of Trump boasting about groping women, which prompted a number of Republican lawmakers to withdraw their support for the candidate.

Meanwhile, some 57 per cent of voters polled by CNN after a heated – and at times hostile – debate late on Sunday between Trump and Hillary Clinton said that his Democratic rival won. Some 34 per cent sided with Trump.

The peso surged more than 2 per cent against the dollar on Monday, leaving it at its strongest level in four weeks.

“Market moves overnight suggest that Donald Trump’s chances of winning the US presidency have weakened following the second presidential debate,” David McNamara, an analyst with stockbroking firm Davy, said in a note to clients on Monday.

“The Mexican peso, which has become something of a bellwether for Trump’s chances, strengthened during the debate. Polls are currently implying a more than 80 per cent chance of a Clinton victory on November 8th.”