Last night we said that from the move in the Mexican peso, you can gauge the market’s understanding of the winner of the debate and the peso is saying it’s Clinton who won. The Mexican peso has strengthened from 19.9 per dollar to 19.5 per dollar. The peso has weakened from 18 per dollar to the current level since Trump’s visit to Mexico in late August. Why not? Given the fact that so much is at stake for Mexico in this year’s US election.

If Republican Presidential candidate Donald Trump wins, it would mean that Mexico might have to pay for the wall along the border as suggested by Mr. Trump. It would be difficult for them not to pay without facing retaliation, given the influence of the United States in the region. But it’s not only the wall that is at stake, it is also the NAFTA (North-American Free Trade Agreement), from which the Mexico has benefitted a lot. If NAFTA sees major revisions it could cost thousands of jobs for Mexico. But it doesn’t end there, Mr. Trump has proposed tax reforms and of posing taxes on goods coming from Mexico to create jobs in the United States by bringing back manufacturers.

If Mexico is able to form a friendlier relationship with the United States, after the initially expected hostility over walls and trade policies, it would ultimately benefit Mexico in the longer run but if the jitters continue it would prove to be very costly for the peso.