First, pray for Miami. I have a love-hate relationship with that city, even deeper than my love-hate with Texas. I would not want to live in that entire metro, not in Miami-Dade, not in Fort Lauderdale, not in Palm Beach. But my family is there along with seven million other people. They have not evacuated. But my brother is sheltering the families of two of his daughters at his house outside the flood zone; the third is an R.N. and she is on call, along with her police officer husband.
Second, allow me to present some evidence that Donald Trump was indeed responsible for most of the weakness in the Mexican peso since he arrived on the political scene in mid-2015. The Mexican peso has strengthened over the past year. When we were there this summer, the peso rose above 5½¢ and stayed there. It had plunged below 5¢ after the election. This was good for Mexicans who wanted to buy imported goods, and I have to admit that Mexico City is still very inexpensive, but still.
The rise means that the peso is all the way back to its level of January 2016, before Donald Trump began winning any primaries. It is not quite back up to the 6¢ level of June 2015, when Trump rode down that escalator. That is probably due to residual uncertainty regarding the NAFTA negotiations: markets are partially pricing in the chance that the negotiations will fail, thereby exposing Mexican producers to WTO tariffs when exporting to the United States.
And so, a prediction. If NAFTA comes out intact from the negotiations, then the real exchange rate of the peso will return back to the level it had back in 2015.
Do note that candidate Trump could move the market with his words; President Trump much less so. Bets are being hedged, but nobody believes that White House words carry any information anymore.
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