Mexico City. The volatility that has been observed in the financial markets will prevail between now and November 5, the day on which the presidential elections will be held in the United States, BBVA México stated this Thursday.
Carlos Serrano, chief economist of BBVA Mexico, specified that, specifically in the case of the exchange rate (the peso with respect to the dollar), if there are signs that give an advantage to the Republican Party candidate, Donald Trump, the Mexican currency will will depreciate.
On the contrary, Serrano explained, if the polls prior to election day favor the Democratic Party candidate, Kamala Harris, the weight will appreciate.
“Between now and November 5 we are going to see great volatility and every time we see polls that give Trump a greater probability of victory, the dollar is going to strengthen against all currencies, including the peso, and every time the polls favor Kamala Harris we will see a more depreciated dollar and a stronger peso, that volatility will hopefully be resolved until November 5,” he said.
During the presentation of a report, BBVA’s chief economist indicated that the exchange rate volatility that has occurred this week is explained by external factors, and what happens with the exchange rate also occurs with the large number of currencies at the level. world.
“The volatility is explained as expectations of what will happen in the United States on November 5 change. When there is data that indicates that Trump is more likely to win, we see a depreciation in the exchange rate, of the peso against the dollar and other currencies.
“This is because if Trump wins, what he proposes are tariffs on imports from around the world, he has said that he wants to put tariffs of 20 percent on all exports and 60 percent on those from China. What will result? Higher inflation in the United States, higher interest rates and a stronger dollar,” said Serrano.
He specified that the Republican candidate also proposes higher fiscal deficits, because he proposes cutting taxes on people with higher incomes, that increases the deficit, he does not propose how to finance it and that is more inflation and high rates, “so the expectation is that a presence of Trump, among other things, could raise interest rate levels in the United States and therefore a stronger dollar.
“But, for example, this morning the peso appreciated because there were some polls that favored Kamala Harris,” added the BBVA economist.
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