The Mexican peso tumbled by the most since the post-Tequila Crisis currency gyrations in 1994-95 as early returns suggested Donald Trump could win the US presidency.
The peso has become a prime gauge of Mr Trump’s fortunes given the Republican candidate’s rhetoric on immigration, trade and the US’s southern border. The currency recovered strongly earlier this week in rising confidence that Hillary Clinton would beat her Republican opponent, but Mr Trump’s strong initial electoral results has pulled the rug from under the peso.
The violent 7.7 per cent slide in the peso’s value, to 19.6 against the dollar, came after New York Times’ Upshot projection showed Mr Trump swinging to a 66 per cent chance of winning the presidency. In early afternoon Asian trading, it fell even further, to 20.5 per dollar – a drop of 11.9 per cent.
That is the biggest drop since the so-called Tequila Crisis, where Mexico nearly went bankrupt, was forced to devalue its currency and was ultimately bailed out by the US and the International Monetary Fund.
The peso is the biggest victim of the resulting sell-off, but US stock market futures have also been hit hard, as have Asian stock markets. The S&P 500 futures index has given up early gains to tumble 3.1 per cent, while the Nikkei has fallen 2.2 per cent and Australian equities have dropped 1.6 per cent.
“The futures and markets are just going up and down with every projection and key state alert,” said Jim Paulsen, chief investment strategist at Wells Capital Management. “The volatility here could continue on the rest of the week particularly if we don’t have a clear winner by the end of the night.”
The Mexican newspaper Reforma reported late Tuesday night that Claudia Ruiz Massieu, the foreign minister, has left the “war room” inside the foreign ministry to head to an urgent meeting in the presidential palace.
Asked if there was panic setting in at the Mexican finance ministry, an official there said: “Yes.”
After polls closed on the US west coast, Mrs Clinton was narrowly ahead in the electoral college, 190 to 186, but Mr Trump was showing surprising strength in bellwether states that had not yet been called, including Wisconsin and Michigan.
