The Mexican peso has tumbled over 3% in the last 4 days, plunging to its weakest against the USDollar since March as the ongoing corruption investigation soured market sentiment.
As we detailed yesterday, a deepening graft investigation involving Alejandro Gutierrez, a former deputy of sitting President Enrique Pena Nieto could imperil his party’s chances in the coming July elections. An ongoing scandal could also bolster the prospects of leftist rival Andres Manuel Lopez Obrador.
"The news of this arrest scares investors," said Jesus Lopez, a strategist at Banco Base in Monterrey, Mexico.
"These days, the exchange rate is more sensitive because of low liquidity, and we already know that the peso is more vulnerable from the political side."
And the pso is extending losses...
This is the biggest 4-day drop since Trump's election.
Combined with the coming elections and NAFTA uncertainty, Citi warns that Xmas illiquidity may provide more peso downside into 2018.