The Mexican peso tumbled after the latest Washington Post-ABC News Tracking poll released showed Republican nominee Donald Trump leading Democratic nominee Hillary Clinton by 1 point.
The currency is down by 1.0% at 19.0403 per dollar as of 9:44 a.m. ET after hovering in the green earlier.
46% of likely voters support Trump while 45% support Clinton, according to the latest poll. For what it’s worth, Libertarian nominee Gary Johnson is at 3%, which the report notes is a new low, and Green Party candidate Jill Stein is at 2%.
The peso has become something of a gauge on Trump’s prospects over the last couple of months of the campaign. Earlier, for example, currency watchers argued that the peso’s strengthening after the first debate suggested that investors thought Clinton had won.
This sort of makes sense, given that Trump’s anti-trade platform could have negative repercussions for the Mexican economy.
A Capital Economics team event recently put together a chart showing the probability of a Trump presidency versus the Mexican Peso/US dollar moves, which you can see below. (Note that the chart ends in October, so the most recent figures aren’t factored in. Also, mind the double y-axis.)
However, it’s also worth noting that the peso’s moves are not entirely linked to Trump’s poll performance.
Neil Shearing, Capital Economics’ chief emerging markets economist, pointed out several weeks back that “since January 2015, the peso has weakened by more than any other major EM currency. So while Trump may have weighed on the peso at the margin, this isn’t the whole story.”
Rather, he suggested, the floundering currency can be more explained by a structural deterioration in the country’s economic position amid long-run issues at Pemex, the state-owned oil company, and chronically weak productivity growth.