Correlation Between Mexican Peso, Trump Poll Numbers

The Mexican peso seemingly moves in the opposite direction to Trump's poll numbers these days.

America's Mr. Nasty is apparently making his presence felt south of the border. With Mexico being on the receiving end of a lot of his isolationist (he suggests leaving NAFTA), protectionist (ditto) and racist (characterizing the Mexican people as "rapists") rhetoric, the political fallout of a Trump presidency (heaven forbid) have not gone unnoticed in the markets. The far right has well and truly established a presence in North America.

Bloomberg offers the chart above in relation to the performance of the Mexican peso, whose fortunes as of late mirror those of Trump's polling numbers in the upcoming US presidential elections. The write-up suggests as much. Also, revisit NAFTA:

Concern Trump will follow through on his promises regarding Mexico if elected has helped the peso weaken 10 percent this year, the worst performance of any major currency apart from the U.K. pound. It was last week’s biggest loser, sliding 1.7 percent, and has since dropped to the lowest since June after Democratic presidential nominee Clinton’s campaign announced she was ill.

The peso’s status as the most-liquid emerging-market currency after China’s yuan has left it particularly vulnerable to selling, sending it to repeated record lows and forced the central bank to raise interest rates.

Mexico is arguably the major world economy most dependent on the U.S. Trade between Mexico and the U.S. has grown fivefold to more than $500 billion in goods annually since Nafta took effect in 1994, making the Latin American nation the largest U.S. trade partner after China and Canada, according to data from the International Monetary Fund. While Mexico has also strengthened its trade ties with other nations and has a free-trade agreement with the EU, it still sent 73 percent of exports to the U.S. in 2015, compared with 79 percent the year before Nafta was implemented.

There's also Trump's talk about holding Mexican expatriates' remittances hostage to building his now-infamous wall which the Mexican government would pay for:

In addition to ending Nafta, Trump has said he’ll make Mexico pay for the wall -- a proposal that the government has repeatedly said is a non-starter -- by holding remittances from immigrants in the U.S., which play an important role in bolstering the peso.

It's no surprise that nasty things happen when the topic turns to the nasty guy.