Trump could unleash 'hurricane' on Mexican economy - cenbank chief
High-level Mexican officials continue to raise the intensity of anti-Trump rhetoric, this time to a category five economic hurricane.
After making a comparison between the US presidential election between Democrat Hillary Clinton and Republican Donald Trump and tropical storms, central bank governor Agustín Carstens was asked in an interview with Radio Formula whether Trump would be a category five hurricane. "Yes, he would be a significantly stronger hurricane, particularly if he accomplishes what he has been talking about in his campaign; even though, it remains to be seen if that happens in reality," said Carstens.
Carstens was referring to Trump's anti-free trade and anti-migrant policy proposals that include building a massive border wall with Mexico and "making Mexico pay for it", and also to do away with the Nafta free trade agreement of which Mexico, the US and Canada form part.
Even though, as Carstens noted, Clinton has shown interest in changing Nafta and has pulled her support for the Trans-Pacific Partnership, "We would be in a much better situation if we were to have President Clinton."
Carstens went on the air to discuss his meeting with senators from the pro-business National Action Party (PAN), where the US election was front and center in the conversations. His comments come only a week after economy minister Ildefonso Guajardo said at a trade forum that Mexico would deal with "the Devil" if it must, should Trump win.
Last month saw validation of the so-called Trump effect – the negative correlation between Trump's chances of winning in November and the depreciation of the peso. This raised alarm among economists at some of the largest Mexican financial institutions, who shifted their outlook and called for the central bank to raise rates, which the bank did on September 29 by hiking 50 basis points to 4.75%.
The peso reached a historic low of 19.92 pesos to the dollar just before last week's US presidential debate but regained strength after a weak Trump performance, followed by a mostly bad news week for Trump. Acknowledging the effect, Carstens stressed, "The peso is undervalued."
Acknowledging the growth of the gap between Mexico's key rate and the US Federal Reserve's policy decisions this year, he said any further moves would be weighed carefully.
Asked about using international reserves to further boost the peso, Carstens said, "We have to be very judicious in the way we use our instruments."
"There are many pressures in the market that do not necessarily respond to [dollar sales]. They are pressures coming from the exterior," he said.
Analysts see more rate hikes on the horizon in Mexico with many calling for another 25bp hike in December.
"The key is to maintain healthy fundamentals," added Carstens, noting that should Trump win, Mexico may have to make tough choices, "It might be necessary to decide on not just monetary issues ... but perhaps fiscal and obviously look for other trade alternatives should something arise, like the interruption of [Nafta]."
Subscribe to the leading business intelligence platform in Latin America with different tools for Providers, Contractors, Operators, Government, Legal, Financial and Insurance industries.
News in: Political Risk & Macro (Mexico)
Deterioration of public finances casts shadow over Mexico's credit rating
Slower economic growth and lower oil revenues in 2025, coupled with a budget deficit of 5% and a debt above 50.2% of GDP, suggests there could be a...
Opposition candidate sticks to promise of reviving mining fund for communities
The fund was eliminated in 2019 at the instruction of President Andrés Manuel López Obrador, but Xóchitl Gálvez has repeatedly promised to reinstat...
Subscribe to Latin America’s most trusted business intelligence platform.
Other projects
Get key information on thousands of projects in Latin America, from current stage, to capex, related companies, key contacts and more.
- Project: Schoonord-Crane, phase 1 and 2 (Schoonord to Parika Four lane Highway)
- Current stage:
- Updated:
1 day ago
- Project: Cerro Cumbre
- Current stage:
- Updated:
12 hours ago
- Project: Ventura
- Current stage:
- Updated:
13 hours ago
- Project: Crane-Parika, phase 3 (Schoonord to Parika Four lane Highway)
- Current stage:
- Updated:
1 day ago
- Project: Riverside Defense Works in the Olmos and Zaña Rivers
- Current stage:
- Updated:
2 days ago
- Project: Tierras Coloradas
- Current stage:
- Updated:
1 day ago
- Project: Sierra Colonia
- Current stage:
- Updated:
1 day ago
- Project: New Valdivia Base Hospital
- Current stage:
- Updated:
2 days ago
- Project: Jiniguare Dam
- Current stage:
- Updated:
2 days ago
- Project: Valiente
- Current stage:
- Updated:
2 days ago
Other companies
Get key information on thousands of companies in Latin America, from projects, to contacts, shareholders, related news and more.
- Company: Summit Nanotech Corporation  (Summit Nanotech)
-
The description included in this profile was taken directly from an official source and has not been modified or edited by the BNamericas’ researchers. However, it may have been...
- Company: Grupo CRCC Chile
- Company: Andes Solar SpA  (Andes Solar)
-
The description included in this profile was taken directly from an AI source and has not been edited or modified by BNamericas researchers. However, it may have been automatica...
- Company: Masivo Silver Corp.
-
The description included in this profile was taken directly from an official source and has not been modified or edited by the BNamericas’ researchers. However, it may have been...
- Company: Tuberfil Indústria e Comércio de Tubos Ltda.  (Tuberfil)
-
The description contained in this profile was taken directly from an official source and has not been edited or modified by BNamericas researchers, but may have been automatical...
- Company: Emgesa S.A. E.S.P.  (Emgesa)
-
Emgesa S.A. E.S.P. is a Colombian company engaged in power generation for the wholesale market and industrial clients from the deregulated market. The company was incorporated i...
- Company: Energy Head
-
The description contained in this profile was taken directly from an official source and has not been edited or modified by BNamericas researchers, but may have been automatical...
- Company: Servicio de Salud Maule
-
Maule Health Service is the health service agency overseeing Chile's Maule region (VII). Its network includes 84 medical establishments, including 13 general hospitals. It is ov...
- Company: Grenergy Renovables Pacific Ltda.  (Grenergy Chile)
-
Grenergy Renovables Pacific Ltda. (Grenergy Chile) is the Chilean unit of Grenergy Renovables SL, a Spanish company that builds and operates PV and wind power plants. The compan...