Donald Trump Is Handing a Windfall to Mexican Immigrant Families
This article by Isabella Cota for Bloomberg may be of interest to subscribers. Here is a section:
Data shows Mexicans are sending more dollars back home than they have in years, a surge explained in part by the rush to take advantage of the attractive exchange rate. What’s more, some experts even believe that more Mexicans could eventually be tempted to cross into the U.S. in search of work if the peso remains at these levels for months to come.
“If you’re saving to buy a house or have a big expense coming up,” said Carlos Vargas-Silva, an economist with Oxford University’s Migration Observatory, “this is the moment” to ship back the money.
Lozano understands that part, of course. Like most Mexicans here, he follows the peso’s fluctuations closely and has been scrambling of late to repatriate every dollar he can. Some weeks, he sends as much as $200, double what he used to. That’s part of the reason his wife has had so much extra spending money. He just hadn’t realized that it was Trump that was triggering those swings in the peso.
It plunged to a record low of 19.93 per dollar early last week before recovering some of its losses as Trump’s campaign showed signs of faltering weeks before the November vote. Investors worry that if elected, Trump would try to seize migrant remittances; or force American manufacturers to close plants in Mexico and re-open them at home (he’s called out Ford Motor Co. and Carrier Corp. on this point); or wind up accidentally weakening the U.S. economy, the buyer of four-fifths of all Mexican exports.
MXN 20 represents a psychological resistance level for the Dollar and some consolidation of its impressive rally is now underway. Nevertheless, a sustained move below the trend mean would be required to question the medium-term uptrend. The fact that the Dollar has been trending higher against the Peso since 2014 highlights the fact that while Donald Trump’s antagonistic rhetoric may have been a factor in the currency’s recent strength it is far from the only challenge facing the economy.
The Philippine Peso has also been falling as investors fear continued populism as Rodrigo Duterte seems intent on playing Russia/China off against the USA in an attempt to gain the best possible advantage for the Philippines. It’s a high risk strategy but it is also worth considering the longer-term chart for perspective. The Dollar has been ranging between PHP 40 and 50 since 2007 and is now trading towards the upper side. Some consolidation of recent gains also appears to be underway.
