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Mexican peso weakened over U.S. election results

Mexican peso weakened over U.S. election resultsMexico's peso recovered somewhat from a 13 percent selloff on Wednesday after Republican Donald Trump's surprise victory over Democratic rival Hillary Clinton for the U.S. presidency, as investors expected action by the central bank to support the currency, Reuters reported.

Trump's threats to rip up a free trade agreement with Mexico and to tax money sent home by migrants to pay for building a wall on the southern U.S. border have made the peso particularly vulnerable to events in the race for the White House.

Mexico's currency weakened by more than 13 percent in after hours and Asian trading on Wednesday, breaking past 20 pesos per dollar, which would be its biggest fall since the 1994 Tequila Crisis.

However, the peso pulled back to trade around 8.5 percent weaker at 19.88 per dollar early on Wednesday, helped by expectations that Mexico's central bank and finance ministry would announce measures to support it at a joint media conference.

Central bank head Agustin Carstens last week said Mexico was prepared for an "adverse" result in the U.S. election, which he has said could hit the country like a "hurricane."

Mexico has more than $175 billion in foreign reserves, and Carstens said last month he would consider using a $90 billion International Monetary Fund flexible credit line "in the event of an external shock."

The central bank has already raised its rate three times this year, lifting it to 4.75 percent to anchor inflation expectations following a sharp depreciation of the peso.

Trump's win caught the market off guard. The peso rallied nearly 1.4 percent on Tuesday before official election results began to be released as the market bet Clinton would win.
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