Mexican Peso Revels in Rare Limelight in Asia as Trump Proxy

  • Oanda trader can’t recall peso move ‘this aggressive’ in Asia
  • Peso most-sensitive currency to U.S. election outcome: ANZ

The Mexican peso edged out Asia’s currencies as the focal point of action in the world’s biggest financial market Tuesday as investors used it as a proxy for Donald Trump’s election prospects.

The peso rebounded 2 percent from a record low, the biggest gain across more than 140 currencies worldwide, as investors perceived Hillary Clinton outperformed Trump in the first U.S. presidential debate. In a CNN/ORC poll of debate watchers, 62 percent said Clinton won the exchange. Speculation that the U.S. Republican candidate, were he to triumph over Clinton in the November election, would move to restrict trade with Mexico contributed to the peso’s slide to an all-time low of 19.9333 per dollar during Asian trading hours Tuesday before the clash between the U.S. politicians.

“I don’t really recall anything as this contentious, for a Mexican move this aggressive, during this time zone,” said Stephen Innes, a senior trader at Oanda Corp. in Singapore, who has been working in financial markets for about 25 years. “This is one of the pressure points that capital markets were looking at and this is what we’re seeing play out right now.”

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Asian traders are learning they’re going to have to monitor a less familiar currency during the election campaign. The region’s investors, especially those in Tokyo, were drawn to the relatively high yield of the Mexican peso amid a “risk-on move” as U.S. stock index futures and the region’s stocks reversed losses, said Oanda’s Innes. Haven assets including the yen and gold fell, suggesting investors saw lower risks ahead.

Concern Trump will follow through on his protectionist measures, including building a wall on the U.S. border with Mexico, has helped the peso weaken 12 percent this year, the worst performance of 16 major currencies. Weak points in Mexico’s economy and emerging-market jitters also contributed to bearish sentiment toward the currency.

The peso rose as much as 2 percent to 19.4848 per dollar in Asia Tuesday, before trading at 19.4973 at 7:56 a.m. in London.

Trump and Clinton sparred on several key issues including foreign policy, trade, taxes, ISIS and nuclear weapons. Trump lashed out at trade with China and Mexico during the debate as he has throughout the campaign. He said the U.S. was being put at a disadvantage.

“The Mexican peso is not usually a currency that gets much attention during Asian trading hours,” said Khoon Goh, the head of regional research at Australia & New Zealand Banking Group Ltd. in Singapore, adding that ANZ doesn’t have a forecast on the Mexican currency. “But given that the Mexican peso has been the most sensitive currency to the U.S. election outcome, it took center stage as the market reacted to the U.S. presidential debate.”

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