How to Play the Mexican Peso on Election Day

The video discusses the impact of political events, such as elections, on currency markets, focusing on the Mexican peso and its reaction to potential outcomes like a Trump victory. It examines the liquidity of currency pairs, the role of central banks, and the possible interventions by Mexican authorities. The video also highlights the resources available to Mexico, including foreign exchange reserves and IMF credit lines, to stabilize the market. The broader implications of policy changes, such as those affecting NAFTA, are also considered.

What is the expected impact on the Mexican peso if Clinton wins the election?

• The peso is expected to remain stable.

• The peso is expected to strengthen.

• The peso is expected to weaken.

• The peso is expected to become more volatile.

What is a key difference between the Brexit debate and the current situation with the Mexican peso?

• The Mexican peso is more liquid than the British pound.

• The British pound is more liquid than the Mexican peso.

• Both currencies are equally liquid.

• Neither currency is affected by political events.

What is one potential action the Mexican Central Bank might take in response to a Trump victory?

• Ignore the market changes.

• Wait to see how the market reacts before intervening.

• Immediately intervene in the market.

• Increase interest rates immediately.

What resources does Mexico have to stabilize its currency market?

• Large foreign exchange reserves and IMF credit lines.

• Only domestic financial reserves.

• No resources available.

• Support from neighboring countries.

What long-term issue might Mexico face if Trump moves against NAFTA?

• A structural growth shock.

• An increase in foreign investments.

• A stronger peso.

• A decrease in currency reserves.