The Mexican peso has gained 8% against the dollar this year. That's "not bad", considering that Donald Trump has threatened to tear up the country's "economic lifeline", the North American Free Trade Agreement, while the likely next president, Andrs Manuel Lpez Obrador, has a reputation as a left-wing populist, says Craig Mellow in Barron's.
Analysts reckon Trump's focus has shifted from Mexico, which accounts for just a tenth of the US trade deficit, to China, which makes up 50% of it. And Obrador, who has surrounded himself with shrewd business people, is not expected to do anything radical in his first year or two. Even if both scenarios pan out, however, most of the optimism appears to be in the price: the peso has already recouped all its post-Trump losses.
Viewpoint
"[EU] trade policy is cumbersomeWithin the EU, Britain has argued strongly for free trade on the economically unassailable grounds that trade barriers raise costs to consumers and protect inefficient industries. Outside the EU, Britain could in principle unilaterally slash or even eliminate tariffs and thereby benefit from the reverse effect, with cheaper import prices. [This] makes theoretical sense but can only be done once. Unilaterally cutting or abolishing tariffs is consistent with WTO rules, provided it applies to every member of the WTO... That would cause hardship and possible closure for significant parts of Britain's economy (notably in agriculture and manufacturing) that would have to compete with an inflow of inexpensive imported goods and produce. It is not politically feasible that any British government would accept such costs."
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
The Times
-
Paying the grandkids’ school fees could generate a shock IHT billPrivate school fees have soared as a result of the government’s VAT policy, meaning more grandparents are helping out – but what are the tax implications?
-
Number of savings deals hits record high – as interest rates slump to two-year lowSavers have more choice than ever when it comes to choosing a savings account or cash ISA. But, the interest rates on offer continue to fall. What’s next for the savings market?
-
Chart of the week: Norway’s crown has slippedCharts The Norwegian krone has slipped to a record low of more than ten to the euro.
-
Chart of the week: sterling’s sea of troublesCharts Sterling slipped to a two-year low against the greenback this week, and remains around 12% below its pre-referendum level.
-
Chart of the week: the pound’s post-war swan diveCharts The pound hit a new 20-month low against the dollar this week as Prime Minister Theresa May postponed the Brexit vote.
-
Chart of the week: government splits rock the randCharts The South African rand slipped by almost 3% last week, its worst five-day showing since August amid worries that President Jacob Zuma may be set to sack his competent and economically literate deputy Cyril Ramaphosa.
-
Chart of the week: Thai baht defies gravityCharts Tourism is booming, the current account is in surplus, and the yield on local assets is enticing. No wonder the Thai baht has risen by 8% against the US dollar this year.
-
Chart of the week: the loonie takes offCharts The Canadian dollar, nicknamed the loonie, has leapt to a two-year high around $1.21 against its US counterpart as a result of Canada's robust eocnomy and higher interest rates.
-
Chart of the week: vote for authoritarianism will crush the Turkish liraCharts The Turkish lira has fallen as Erdogan’s authoritarian tendencies have unsettled foreign investors. It is at near record lows against the US dollar, and is unlikely to rebound any time soon.
-
Chart of the week: a pause in the peso’s declineCharts The Mexican peso has bounced by around 5% from record lows against the US dollar in the past few days. But it has still lost 12% in a year.
