Mexico's peso jumped as much as 1.1 percent Monday after an adviser to Donald Trump signaled the new administration may be less anti-trade than investors originally envisaged.
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The currency rose for the first time in four days after the publication of an opinion piece in the Financial Times by Trump economic adviser Anthony Scaramucci suggesting the president-elect is open to negotiations before imposing import barriers. The Republican candidate had campaigned on promises to tear up trade deals, including the North American Free Trade Agreement, crack down on illegal immigration, and build a wall along the southern border that would be paid for by Mexico.
"Mr. Trump believes in free-but-fair trade," Scaramucci wrote. "Tariffs are unnecessary if agreements like the World Trade Organization and Nafta are adequately enforced."
The peso gained 0.5 percent to 20.74 per dollar. It had tumbled 12 percent during the previous three sessions, the biggest decline among any currency worldwide, and touched a record-low 21.3897 after Trump's surprise win in the Nov. 8 election.
Trump had said in an interview with CBS's 60 Minutes aired Sunday night that parts of a proposed wall with Mexico could be a fence instead. The U.S. accounts for 80 percent of the North American nation's exports.
"Comments from the Trump camp suggesting tariffs are not a policy yet set in stone had the effect of lessening some of the downward pressure on the peso," said Ray Attrill, the global head of foreign exchange at National Australia Bank Ltd. in Sydney. "But those comments and talk of fences instead of walls are far too fuzzy at this stage to prompt a sea change in sentiment towards the peso."
Loomis Sayles & Co. Vice Chairman Dan Fuss said Friday investors are overestimating the risks a Trump presidency poses to Mexican trade and investment.
"People have gotten very bearish because they expect the situation between the Mexican government and the U.S. government to deteriorate badly," Fuss said in an interview in Tokyo. "I don't agree with that. There's not going to be any wall."
Societe Generale SA takes the opposite view.
"Concerns over NAFTA will weigh on the peso just as Brexit has weighed on the pound," said Jason Daw, the bank's Singapore-based head of emerging-market currency strategy. "Our preference is to buy [pesos] on dips."
Business on 11/15/2016