By Ryan Vlastelica
Trump's policy proposals on trade and immigration are seen as severe headwinds for Mexico
The Mexican peso sank to a record low on Wednesday in the wake of Donald Trump's unexpected victory in the U.S. presidential election, while the Russian ruble shot higher.
The peso traded at 19.83 to the dollar compared with 18.35 late Tuesday, a move of more than 8%. Trading was extremely volatile in the currency, swinging between a low of 18.16 and a high of 20.78, which represented the weakest price ever for Mexico's currency compared with its northern neighbor.
The peso has been closely tiedto the Republican candidate Trump's electoral prospects, and had risen for four straight sessions on expectations that his largely poll-leading Democratic challenger, Hillary Clinton, would win. Some of Trump's policy proposals, including those on trade and immigration, are seen as detrimental to Mexico's economy.
Russia's ruble, meanwhile, traded at 63.41 to the dollar, compared with 64.15 late Tuesday. Trump's victory is seen as supportive for Russia. The president-elect has a number of ties with the country, and he has promised to get tough on both China and Japan--two of Russia's primary rivals in Asia.
"It's difficult to determine whether Trump's views towards Russia and his apparent admiration of [Russian President Vladimir] Putin will have any material impact on Russia's economy, but these smaller economies will be the most at risk of volatility over the next couple of weeks," said Viraj Patel, foreign exchange strategist at ING, who was referring to both Mexico and Russia as smaller economies.
While the dollar partially recovered against other currency rivals (http://www.marketwatch.com/story/dollar-mexican-peso-drop-as-trump-secures-us-presidency-2016-11-09)--it had initially dropped against the euro and the pound--volatility was expected to persist in major currency trades, as well as for the peso and ruble.
"The market seems too calm for comfort. There are a lot of questions about Trump's policies, especially his fiscal policies," Patel said. "Once we find out the answer to those, we suspect the market may not like the answer."
(END) Dow Jones Newswires
November 09, 2016 09:03 ET (14:03 GMT)
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