Trumps success in Pesos (Blog 2)

There are many interesting ways for one to judge the way that an election is going in terms of how the candidates are doing. You can look at polls or at how many people attended a debate, or with the current election you can look at the value of the Mexican Peso. A recent Economist article did just that and the results are actually very interesting. Since the start of the year the value of the Peso has dropped 12%. One reason for this huge drop in value is due to the success of the Republican presidential candidate Donald Trump. Trumps stance on foreign policy and exchange with Mexico is that he wants to build a large wall, increase taxes on imports, and withdraw from the North American Free Trade Agreement. Not only would this negatively affect the Mexican economy but there would be affects to the Canadian economy. The question that immediately came into my head was, how do we know Trumps success is in any way linked to Peso? The answer came after the presidential debate on September 26th. Hillary blew Trump out of the water during the debate and the value of the Peso rose 2%. Of course the US election is not the only thing affecting the value of the Peso, another major area thats leading to the decline of the Peso is the reliance (18%) on its countries sources of oil. Mexico actually has had to raise interest rates 3 times in the last year to help fight this decline.  After having our class with Mr. Nagarajan about operations something that really interested me was looking at all of these different factors to determine how to run a business. Governments run similarly to businesses in the sense that they are trying to run smoothly and maximize efficiency. So this led me to my next question which was how does a business or government respond when something completely out of their control happens? In this Specific case I really feel that the Mexican government is gonna have to wait it out and pray for Hillary. But when it comes down to it the Peso has a lot more to worry about then just Trump.

 

 

 

 

http://www.economist.com/news/finance-and-economics/21707943-fear-trump-presidency-plays-havoc-mexicos-currency-slip-slidin-away

 

word count: 390

Leave a Reply

Your email address will not be published. Required fields are marked *