Latin American Economy & Business - November 2016 (ISSN 1741-7430)

Regional currencies react to Trump

The victory of Donald Trump in the US presidential election on 8 November will have significant economic implications for Latin America, with the most immediate impact being felt on the region’s currencies. Aside from a sharp hit to the Mexican peso, many of the other main currencies in the region have also weakened since Trump’s win. This reflects a variety of factors, including market fears about weaker growth and lower investment in Latin America, but also reflects dollar strength, with the US currency strengthening against most other global currencies. Given that many Latin America currencies were already fairly weak before Trump’s win, continued depreciation in 2017 could have second-round implications, raising domestic inflation and complicating monetary policy management.

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