Mexico will not shell out for Trump wall, but seeks cooperation

Mexico mentioned on Wednesday it could operate with Donald Trump for your advantage of the two nations just after his shock U.S. election win, but reiterated it could not pay for his planned border wall, which stirred up deep resentment in the course of a fraught presidential campaign.

As Trump strode towards victory, the peso plunged 13 percent in its most significant fall since the Tequila Crisis devaluation 22 years in the past, ahead of paring losses to trade down % at 19.91 per dollar. Nonetheless, officials held back from taking action to assistance the peso regardless of it hitting lifetime lows overnight.

Trump's threats to dump the North American Totally free Trade Agreement (NAFTA) agreement with Mexico and Canada, and also to tax dollars sent home by migrants to pay out to the controversial wall within the southern border, have made the peso particularly vulnerable to occasions while in the U.S. presidential race.

"Very hard times are coming to Mexico," explained analyst Gabriela Siller of Mexican bank BASE.

Still, President Enrique Pena Nieto said he termed to congratulate Trump, and had agreed to meet the brand new Yorker for the duration of the transition phase to discuss joint cooperation, which he hopes would strengthen the competitiveness of North America.

Welcoming Trump's victory speech pledge to seek out "common ground" and partnership with other countries, Pena Nieto explained in a televised statement that Mexico shared the exact same vision.

"Dialogue to produce agreements continues to be the best route for Mexico, and my government will seek opportunities that benefit each nations in this new phase of bilateral relations," he said.

However, Foreign Minister Claudia Ruiz Massieu reiterated that Mexico wouldn't shell out for Trump's proposed wall. The vow to produce Mexico pay to the barrier was a crucial characteristic of his stump speeches.

Ratings agency Fitch stated Trump's victory might add downside risks to Mexico's financial growth, even though Moody's warned the government might not meet its targets of cutting its price range deficit if flows of trade or foreign investment wilt under Trump.

Growth fear

The two Moody's and Standard & Poor's rating agencies put Mexico's credit rating on a negative view earlier this year.

Gabriel Casillas, an economist at Banorte, predicted Trump's victory will shave 0.3 percentage point from 2016 financial growth, and explained the peso could suffer for months as the market tries to figure out what Trump could do in office.

"Because of the uncertainty of what Trump could do, consumers will postpone purchases, companies will postpone investments," Casillas said, but added that he thought Trump's actual policies will fall short of his rhetoric, not least because unwinding trade with Mexico is easier said than done.

"I don't think Trump will do a lot of the things he mentioned he will do," he stated.

Others were more pessimistic.

Morgan Stanley analysts mentioned in a note that the fallout from a Trump presidency would have "deep ramifications" for that equity market and that foreign investment could stall.

"Risks of a difficult landing in Mexico have clearly risen," the bank's analysts said.

But for now the market pulled back from its initial panic. The peso recovered from its low right after Trump took a measured tone in his victory speech and did not invoke any of his threats against Mexico, analysts stated.

Mexico's benchmark IPC stock index fell more than 3.0 % initially, but pared losses and closed down 2.23 %.
"The market has calmed down a bit and given the advantage of doubt to a more conciliatory Trump," stated Marco Oviedo, an economist at Barclays in Mexico City.

Mexican-based economists had expected a snap interest rate rise, but central bank Governor Agustin Carstens told a news conference on Wednesday morning the bank would take any necessary measures pending market conditions.

He explained it could hold a monetary policy meeting as scheduled on Nov. 17, but did not announce any immediate steps to assistance the currency. Mexico has already raised its benchmark interest rate three times this year to help the peso.

Finance Minister Jose Antonio Meade mentioned authorities were monitoring the situation and would act if needed.

The central financial institution hiked its essential interest rate in September by 50 basis points to 4.75 % to anchor inflation expectations following the peso's creeping depreciation.

Mexico has more than $175 billion in foreign reserves, and Carstens said last m

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