The potential for a more volatile external environment under a Trump administration could dampen capital flows to Latin America, making a substantial recovery for LATAM currencies challenging.
Despite the uncertainty surrounding trade policies from the incoming Trump administration, the USMCA could provide the Mexican peso with a certain degree of protection against market volatility.
Potential tariff increases on products from Mexico could risk heightening tensions in trade relations with the US, impacting Mexico's economy even before any reviews of the USMCA.
While political headlines may suppress appetite for the MXN in the short term, the USMCA remains intact, implying a possibility for long-term relief for Mexico's economy.
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