Could the Peso’s Value Predict the Presidential Election?

Usually it’s impossible to pinpoint a single variable in a currency’s value, but the correlation between Trump’s poll standings and the peso’s value is too close to ignore.

By Joy DiazOctober 11, 2016 11:47 am|

Picture this graph in your head. Two lines – one for Donald Trump’s presidential odds, the other for the value of the Mexican peso. As Trump rises, with rhetoric about a border wall and deporting undocumented immigrants, the peso plummets.

Usually it’s impossible to pinpoint a single variable as the sole source of change in a currency’s value. But the correlation between Trump’s performance and the peso is too close to ignore. Take the first presidential debate – most pundits put it in the win column for Hillary Clinton, and the peso responded with a 2.5 percent jump.

So how much should we trust the peso as a presidential race predictor? Jon Sindreu, a staff reporter for the Wall Street Journal, says the trend comes from investors betting on the market.

“Investors just don’t know how to bet on the outcome of the U.S. presidential election,” he says. “They normally latch onto something, and in this case, clearly it’s the peso.”

What you’ll hear in this segment:

– What’s behind the relationship between Donald Trump and the peso

– Why peso values are so volatile during presidential debates and how the election outcome could impact remittances

– Who investors are betting will win the election