Mexico prepares contingency plan in case Trump wins
November 3, 2016
Central Bank Gov. Agustín Carstens said officials are looking at ways to handle any financial or economic fallout from a victory by the Republican candidate
Mexico is preparing a contingency plan in the event Donald Trump wins the US presidential election, said Central Bank Governor Agustín Carstens.
"If the adverse situation plays out, Mexican authorities will respond in some way," Carstens said on Wednesday during an interview on Milenio Televisión. "We’re discussing a contingency plan with the Finance Ministry [but] we hope we won’t have to use it."
Carstens, who has said a Trump victory would hit Mexico like a "hurricane," did not mention the Republican nominee by name in the interview. He said Mexican authorities were also bracing for market volatility regardless if Trump or Hillary Clinton emerges as the winner.
"Whatever the outcome, and we hope it will be a positive one, although it could be negative, we, the authorities, would need to adjust our policy position if needed," he said. Carstens did not provide any specifics about the contingency plan.
The Mexican peso has seen volatile trading in recent weeks and fallen sharply over the last several days as some polls in the US showed the race for the presidency tightening. On Thursday, the peso broke two days of losses after two new polls showed Clinton holding a slight edge over Trump.
Trump has repeatedly attacked Mexico on the campaign trail and vowed to renegotiate trade deals that could mean higher tariffs for Mexican exports.
"The United States is our leading trade partner; 80% of our exports go there," Carstens said. "Any change in that would have a very important impact. If the next US administration implements protectionist policies, it would have an adverse effect on us."
Mexico’s central bank, or Banxico, has raised interest rates to shore up the peso but has held off on selling dollars in the foreign exchange market since earlier this year.
Finance Minister José Antonio Meade told Televisa on Wednesday that officials are monitoring the market but he added that it did not make make sense to intervene for now, saying it would be like “throwing drops of water into the ocean."
Carstens said the central bank was focused on keeping Mexico’s inflation rate around 3%. "We have to take care that inflation does not go above 3%," he said.