NEW YORK (AP) — Global investors are seriously worried about Mexico.
The election of Donald Trump as the next president of the United States has caused investors to bet heavily against Mexico, its currency and Mexican companies. They worry that Trump's rhetoric of building a wall, throwing out undocumented immigrants and renegotiating trade agreements will damage the country's economy.
The peso fell nearly eight percent in mid-afternoon trading on Wednesday to roughly 20 pesos to the dollar, its lowest value against the dollar in history. In comparison, the peso traded at roughly 13.50 pesos to the dollar two years ago, well before Trump announced his candidacy and the rhetoric of the 2016 election heated up. The stock market in Mexico was down more than 2 percent in afternoon trading.
Trump's threats to repeal or renegotiate the North American Free Trade Agreement are real and so is the potential damage to Mexico's economy. The United States is Mexico's largest trading partner and NAFTA makes up the backbone of that commerce.
"The relationship of Mexico and the U.S. is uncertain," said Isidro Morales, of the Monterrey Institute of Technology and Higher Education. "Donald Trump is not a person of institutions. Surely it will be a unilateral policy worse than (George W.) Bush and we don't know what to expect."
Not only would U.S.-Mexico trade be affected under a Trump presidency, but if his rhetoric holds regarding deporting the millions of undocumented workers in the U.S., that could also have a negative impact to Mexico's economy. Mexicans living abroad, most of them in the U.S., send a lot of money each year back home to support families. Last year $24.8 billion in remittances were sent to Mexico. That money is a direct infusion of cash into the Mexican economy, used to buy goods and services. If those workers must return from the U.S., that money will no longer be entering Mexican families' pocketbooks.
"What are those people going to do? They will have to find a way to survive on this side," said Reyes Isidro, a barista in Mexico City.
AP Correspondents Maria Verza and Christopher Sherman contributed to this report from Mexico City.
Copyright 2016 The Associated Press.
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