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Tale of Two Pesos Shows Investors Getting Burned by Politics

Mexican, Colombian pesos start to diverge before elections
Colombia mostly holding on to gains while Mexico reverses

Bloomberg business news — Nafta Deal Will Not Be Done By May 1

By

Ben Bartenstein and

April 30, 2018, 10:00 AM UTCUpdated onApril 30, 2018, 5:30 PM UTC

The year started off brilliantly for Mexico’s peso. Same for Colombia’s. By the end of January, both had soared more than 5 percent. No other currency in the world, save Norway’s krone, was hotter than the pesos.

The reasons for the gains were different -- Colombia’s peso was up on surging oil, Mexico’s on optimism that Nafta renegotiation talks were going well -- but the implicit, underlying message in the rallies was the same: Investors weren’t worried about upcoming presidential elections.