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The government of Mexico is preparing for a potential economic fallout if Donald Trump is elected president in the US, indicating that the country needs a less politically-reliant currency, like Bitcoin.
Mexico, Donald Trump, Economy, Bitcoin, Jose Rodriguez
The government of Mexico is preparing for a potential economic fallout if Donald Trump is elected president of the US.
According to the Governor of Mexico’s central bank, Agustín Carstens, economic officials are planning a contingency plan in case of an unfavorable US presidential outcome, that is, if Trump wins. This is due to a negative narrative against Mexico pushed by Trump on the campaign trail, and fears that his administration would be harmful to economic relations between the two bordering nations.
Over the course of the election season, the Mexican Peso’s exchange rate with the US dollar has closely tracked Hillary Clinton’s polling numbers, indicating that key Mexican economic players consider her to be the more favorable choice for improving US-Mexico economic relations. Whenever Trump has experienced strong polling, the peso has suffered as a result.
Even without the impending threat of further devaluation, the peso is already experiencing rough conditions. According to Jose Rodriguez, vice president of Payments for Bitso, the peso is performing lower than at any point this century:
“Mexican peso has had one of its worst performances in 20 years, getting into its worst exchange rate, around 20 pesos per dollar. This is 60 percent since its lowest rate at the beginning of the current president’s term.”
Rodriguez believes that this poor performance could worsen significantly in the event of a Trump victory, as the currency has tracked US election polls:
“The Mexican Peso has shown volatility and a lot of sensibility to the debates and polls, normally spiking when there is a sentiment Trump is up in the polls, and some breathing space when Hillary is perceived as doing better in the debates or polls. According to the government they have been working on a contingency plan if Trump wins. According to some analysts, the Mexican peso could devalue even further to 25 pesos per dollar if there is a Trump victory. That would be an extra 30 percent devaluation.”
According to CEO of Saldo.mx, Marco Montes Neri, when a currency shows poor performance because of political developments to such a degree, a replacement is needed, one which is not so dependent on politics, such as Bitcoin:
“I think events like Brexit or Trump winning, that are capable of affecting a currency, show how necessary a new currency is. A currency agnostic to the outcomes of the current broken democracy exercises. Anyone supporting the idea of an engineered monetary system should consider Bitcoin.”
Rodriguez sees a situation where a peso devaluation, because of political developments in the US, will cause Mexican demand for Bitcoin to rise, as well as its price:
“There is a relation to Mexican Bitcoin price and the USD price. Normally when USD goes up, Bitcoin price in the Mexican Peso follows. If we see a devaluation of 30 percent in the Mexican Peso versus USD, we will see a bigger increase in Mexican Bitcoin price. There will also be a surge in Bitcoin demand, pushing the price even further.”
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