MXN and CNY vs. Trumponomics - Rabobank

Research Team at Rabobank notes that since the election of Donald Trump as US President both CNY and MXN have weakened vs. USD – however, the former has declined just a little while the latter has collapsed.

Key Quotes

“Given Mexico’s vast exposure to the US economy relative to China’s that makes sense.”

“However, China would also be vulnerable to US trade barriers given the only thing preventing its FX reserves from declining even faster is the trade surplus it runs.”

“Overall, it still seems likely to us that over the course of 2017 China will opt to let CNY weaken. On that basis, MXN’s underperformance relative to CNY may be about to change.”