Black Friday is Now! Don’t miss out on up to 60% OFF InvestingProCLAIM SALE

UPDATE 1-Mexico says has tools to fight financial volatility

Published 2016-11-14, 10:33 p/m
© Reuters.  UPDATE 1-Mexico says has tools to fight financial volatility
NUE
-

(Adds quote from finance minister, background on trade)

MEXICO CITY, Nov 14 (Reuters) - Mexico has an array of tools to face down financial volatility in the wake of the U.S. presidential election, Finance Minister Jose Antonio Meade said on Monday, after Donald Trump's victory sent the peso currency MXN=D2 into a tailspin.

The government can use a windfall stemming from the Mexican central bank's foreign exchange gains on the peso, as well as some 110 billion pesos ($5.3 billion) in its oil stabilization fund, to ensure public finances are stable, Meade said.

"And we're facing this situation with well-capitalized banks," Meade said at an event in the central city of Puebla.

Trump's win sparked fears because of threats he made in the campaign to dump the 1994 North American Free Trade Agreement (NAFTA) if he could not recast it in the United States' favor, sending the peso to a record low of more than 21 per dollar.

NAFTA is a pact between the United States, Canada and Mexico, which sends 80 percent of its goods exports to the U.S. market.

Meade also noted the Mexican government had refinanced its 2017 debt maturities, meaning it can cover its financing requirements for next year in the domestic market.

"Mexico's public debt ... is something we are revising and discussing with the market," the minister said.

Speaking earlier at the same event, Mexico's Economy Minister Ildefonso Guajardo said he was sure Trump would not ditch NAFTA and noted that new chapters should be added to the trade deal to reflect economic changes over the past 20 years.

An updated NAFTA could cover e-commerce, protection of data and intellectual property in biotech medicine, promoting value chains at small- and medium-sized firms and taking a regional stand against unfair practices such as steel dumping, he added.

Mexico has in recent months slapped tariffs on Chinese steel imports, and one of Trump's top trade advisers, Dan DiMicco, former chief executive of U.S. steelmaker Nucor (NYSE:NUE), has pointedly criticized China for dumping cheap steel on the world market.

If Mexico and the United States were to align policies on such issues it would chime with trade experts arguing for the NAFTA partners to pursue a more regional approach to safeguarding the competitiveness of North America.

Guajardo himself spoke of the need to defend the NAFTA region in an interview with Reuters last week. = 20.6770 Mexican pesos)

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.