Mexico raises interest rates after Trump victory

By Nancy Caouette
MEXICO CITY (AA) – The central bank here raised interest rates Thursday after Donald Trump’s U.S. presidential election win sunk the peso to historical lows against the dollar.
Banxico increased its key rate by a half point to 5.25 percent -- the highest in seven years.
The bank’s board members, who have raised interest rates four time this year, justified the move by saying in a release it was "a more complex global economic panorama, caused, among others, by the U.S. polls and its results”.
The volatile peso fell from 20.34 per dollar to 20.41 after the announcement, demonstrating that the market expected a larger increase.
The peso served as a barometer during the U.S. presidential election, falling when polls indicated Trump was gaining ground and rising as Hillary gained support.
In September, Banxico chose to raise its rate by a half a point to contain peso depreciation fed by rumors of a U.S. Federal Reserve interest rate hike and a potential victory by Trump.
After Trump’s election, Finance Minister Jose Antonio Meade and central bank governor Agustin Carstens said the government had a “contingency plan” to contain the "hurricane" that could represent Trump for Mexico’s economy.
Thursday’s interest rate hike, however, is the first step Mexico has taken to control the volatility of its currency since the U.S. presidential election.