Posted November 04, 2018 12:13:24The first few days after the inauguration of Donald Trump are an anxious time for many Mexicans.
In many parts of the country, banks are closed, and tourists are barred from entering the country.
But the peso is up by nearly 40% against the dollar, and a lot of businesses have closed.
“I was worried when I got to Mexico City that my business would be closed,” said Jose Goyens, an executive at a software company in Mexico City.
“The peso has been up 20% in a week.
People are very anxious, and they want to be in their homes and not be worried about what is going to happen.”
In addition to the currency devaluation, the Trump administration has imposed a series of economic restrictions on Mexico, including a moratorium on exports of oil, gasoline and raw materials to the United States and a ban on importing machinery.
That’s made it harder for companies to export their goods and to hire more people.
And on Monday, Trump issued a decree that would impose a 90-day moratorium on all U.S. travel to Mexico.
“It’s a lot to swallow,” said Fernando Martinez, a professor at the National Autonomous University of Mexico in Mexico.
Some Mexicans are taking a wait-and-see approach.
“There are many things that can happen, but I don’t think we’re going to see an abrupt end to the pesos,” said José Córdoba, president of the Association of Mexican Chambers of Commerce and Industry.
The peso was trading at 14.30 to the dollar on Monday afternoon, up 2.2% on Tuesday.
Many Mexican companies have decided to delay hiring for several months, to avoid losing any money on the investments they made in Mexico under the Trump deal.
“This is just the beginning,” said Juan Antonio Martínez, chief executive of Mexico City’s El Universal newspaper.
“We’ll see what happens in the next weeks.”
The Trump administration’s policies could have long-term implications for Mexico.
As the Trump Administration is renegotiating NAFTA, it’s unlikely that Mexico will be able to move forward on a long-standing pact that was in place from the early 1990s until 2002.
Mexico’s economy is already struggling, and the peson has lost about 80% of its value against the U.K. pound since Trump took office.
The devaluation is expected to take a major toll on Mexico’s exports.
In addition, Mexico will need to boost imports of agricultural products such as rice, maize and corn.
The trade war with the United Kingdom over the Falkland Islands has forced Mexico to cut imports of some of its most important crops.
If that means the pesoan devaluation makes imports more expensive for Mexican consumers, it could have serious consequences for the country’s economic recovery.