Chart of the week: The Mexican peso has peaked

The Mexican peso has gained 8% against the dollar this year. But that's as far as it is likely to go.

892_COTW

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."

The Times

Recommended

The currencies to bet on this year
Currencies

The currencies to bet on this year

The US dollar could be set to weaken this year, while the euro, Canadian dollar and the Swiss franc could be good bets for optimistic traders.
17 Jan 2020
The stars are lining up for bitcoin – make sure you own some
Bitcoin

The stars are lining up for bitcoin – make sure you own some

With recent endorsement by the likes of Paypal and Twitter’s Jack Dorsey, cryptocurrency bitcoin is getting increasingly mainstream. And with the pric…
28 Oct 2020
Buying bitcoin could be the best way to play the remote working boom
Bitcoin

Buying bitcoin could be the best way to play the remote working boom

The coronavirus pandemic has accelerated the move to home working, flexible employment practices and the rise of the “digital nomad”. One of the best …
21 Oct 2020
The Bank of England should create a "Bitpound" digital currency and take the world by storm
Bitcoin

The Bank of England should create a "Bitpound" digital currency and take the world by storm

The Bank of England could win the race to create a respectable digital currency if it moves quickly, says Matthew Lynn.
18 Oct 2020

Most Popular

The Bank of England should create a "Bitpound" digital currency and take the world by storm
Bitcoin

The Bank of England should create a "Bitpound" digital currency and take the world by storm

The Bank of England could win the race to create a respectable digital currency if it moves quickly, says Matthew Lynn.
18 Oct 2020
Don’t miss this bus: take a bet on National Express
Trading

Don’t miss this bus: take a bet on National Express

Bus operator National Express is cheap, robust and ideally placed to ride the recovery. Matthew Partridge explains how traders can play it.
19 Oct 2020
Three stocks that can cope with Covid-19
Share tips

Three stocks that can cope with Covid-19

Professional investor Zehrid Osmani of the Martin Currie Global Portfolio Trust, picks three stocks that he thinks should be able to weather the coron…
12 Oct 2020