Mexico’s central bank chief warned back in September that a Donald Trump victory in the US election would hit his country like a powerful storm.
After Hurricane Trump made landfall, the peso fell to an all-time low Wednesday and the Mexican stock market plunged on fears Trump would make good on his promises to upend economic ties.
But, clearly striving to project a sense of stability, the government said Wednesday it did not need to take any immediate economic actions, and President Enrique Pena Nieto extended a hand to the Republican billionaire.
Pena Nieto said he had congratulated Trump for his victory over Democrat Hillary Clinton during a “cordial, friendly and respectful” phone conversation.
“I agreed with the president-elect to meet, preferably during the transition period, to define with clarity the direction that the relationship between both countries should take,” he said from his official residence.
“We both agreed that we must work for a relationship of trust, of a shared future, because our countries are very important to each other,” he said.
“I am optimistic. It’s clear that a new phase in relations opens with the arrival of a new government, but I also think that there is a great opportunity” for the development of both countries, said Pena Nieto, who once said Trump’s rhetoric recalled the rise of Adolf Hitler.
The stakes are high for Mexico.
Trump has vowed to deport millions of undocumented immigrants, to force the Mexican government to pay for a giant border wall and to renegotiate the North American Free Trade Agreement (NAFTA).
Pena Nieto angered many in his country for meeting with Trump, who has described Mexican migrants as rapists, at his official residence in Mexico City on August 31.
The president later conceded that the invitation had been too hasty but insisted he was right to open dialogue with a potential future US president.
While Pena Nieto privately told Trump at that meeting that Mexico would not pay for the wall, it was not discussed again on Wednesday, a Mexican official said.
Foreign Minister Claudia Ruiz Massieu, however, reiterated to the Televisa network that “paying for a wall is not part of our vision.”
Mexicans were thunderstruck by Trump’s victory.
“I feel very sad. It’s a nightmare, with a lot of uncertainty about what’s going to happen,” said Erick Sauri, a 35-year-old architect who watched the election in dismay at an American barbecue restaurant in Mexico City.
The Mexican currency weakened to 20.20 pesos to the dollar, a 7.18 percent drop from the previous day, according to private bank Citibanamex, while stocks closed 2.23 percent lower.
But Finance Minister Jose Antonio Meade said there was no need for “premature actions” as Mexico has inflation under control, holds international reserves total $175.1 billion and enjoys macroeconomic stability.
“Mexico has lived through challenges of volatility in the past that we faced with unity, seizing on our economic strength and taking correct and prudent policy decisions, and this won’t be an exception,” Meade said.
Central bank chief Agustin Carstens, who in September had compared Trump to a maximum Category Five hurricane, said bank governors would meet next week for a monetary policy meeting.
The likelihood of Trump pursuing his Mexico policies is unclear, according to ratings agency Fitch.
“But the advent of a Trump administration increases economic uncertainty in Mexico given its very close economic ties to the US,” Fitch said in a note.
Jonathan Heath, a prominent Mexico City-based economist, said the peso would continue to fall in the near term.
“We are in shock and in a way the markets are reflecting that,” Heath told AFP.
But he said the main threat is the structural changes that could befall Mexico if Trump tries to scrap NAFTA.
Two-way trade in goods totaled $531 billion in 2015, and 80 percent of Mexico’s exports goes to the United States.
“Mexico is the country that stands most to lose at a global level,” Heath said.
The money Mexican immigrants send home from the United States provides another important economic lifeline: such remittances totaled $17.7 billion in the first eight months of the year.
“In the very short term, we could see an increase in remittances,” Heath said, “as many families take advantage of the exchange rate in the face of the uncertainty that they may no longer be able to do so.” AFP