Thread: Mexico will not pay for Trump wall, but seeks cooperation

Wed Nov 9, 2016 | 6:48pm EST

Mexico will not pay for Trump wall, but seeks cooperation


A worker reads a freshly printed newspaper with the headline reading 'We will tremble' at a printer of the
local daily Norte in Ciudad Juarez, Mexico. REUTERS/Jose Luis Gonzalez


A man gets his shoes shined as he reads a local newspaper with the headline reading 'We're screwed' in
Mexico City, Mexico, November 9, 2016. REUTERS/Carlos Jasso
By Michael O'Boyle and Noe Torres | MEXICO CITY


A U.S. worker inspects a section of the U.S.-Mexico border wall at Sunland Park, U.S. opposite the Mexican
border city of Ciudad Juarez, Mexico, November 9, 2016. Picture taken from the Mexico side of the
U.S.-Mexico border. REUTERS/Jose Luis Gonzalez


U.S. workers build a section of the U.S.-Mexico border wall at Sunland Park, U.S. opposite the Mexican border
city of Ciudad Juarez, Mexico, November 9, 2016. Picture taken from the Mexico side of the U.S.-Mexico border.
REUTERS/Jose Luis Gonzalez


A U.S. worker builds a section of the U.S.-Mexico border wall at Sunland Park, U.S. opposite the Mexican
border city of Ciudad Juarez, Mexico, November 9, 2016. Picture taken from the Mexico side of the
U.S.-Mexico border. REUTERS/Jose Luis Gonzalez

Mexico said on Wednesday it would work with Donald Trump for the benefit of both nations after his surprise U.S. election win, but reiterated it would not pay for his planned border wall, which stirred up deep resentment during a fraught presidential campaign.


Mexican pesos and U.S. dollar banknotes are seen in this picture illustration, November 3, 2016.
REUTERS/Edgard Garrido


A board displaying the exchange rates of Mexican peso against the U.S. dollar is seen at a foreign exchange
house in Ciudad Juarez, Mexico, November 8, 2016. REUTERS/Jose Luis Gonzalez

As Trump strode toward victory, the peso plunged 13 percent in its biggest fall since the Tequila Crisis devaluation 22 years ago, before paring losses to trade down 8.7 percent at 19.91 per dollar. Still, officials held back from taking action to support the peso despite it hitting lifetime lows overnight.

Trump's threats to dump the North American Free Trade Agreement (NAFTA) agreement with Mexico and Canada, and to tax money sent home by migrants to pay for the controversial wall on the southern border, have made the peso particularly vulnerable to events in the U.S. presidential race.

"Very hard times are coming to Mexico," said analyst Gabriela Siller of Mexican bank BASE.

Still, President Enrique Pena Nieto said he called to congratulate Trump, and had agreed to meet the New Yorker during the transition phase to discuss joint cooperation, which he hopes would strengthen the competitiveness of North America.

Welcoming Trump's victory speech pledge to seek "common ground" and partnership with other countries, Pena Nieto said in a televised statement that Mexico shared the same vision.

"Dialogue to make agreements is still the best route for Mexico, and my government will seek opportunities that benefit both nations in this new phase of bilateral relations," he said.

Nevertheless, Foreign Minister Claudia Ruiz Massieu reiterated that Mexico would not pay for Trump's proposed wall. The vow to make Mexico pay for the barrier was a key feature of his stump speeches.

Ratings agency Fitch said Trump's victory may add downside risks to Mexico's economic growth, while Moody's warned the government may not meet its goals of cutting its budget deficit if flows of trade or foreign investment wilt under Trump.


Mexico's President Enrique Pena Nieto delivers a message after U.S. Republican candidate Donald Trump
won an unexpected victory in the presidential election, at Los Pinos presidential residence in Mexico City,
Mexico, November 9, 2016. REUTERS/Carlos Jasso

GROWTH WORRY

Both Moody's and Standard & Poor's rating agencies put Mexico's credit rating on a negative view earlier this year.

Gabriel Casillas, an economist at Banorte, predicted Trump's victory will shave 0.3 percentage point from 2016 economic growth, and said the peso could suffer for months as the market tries to figure out what Trump could do in office.

"Because of the uncertainty of what Trump could do, consumers will postpone purchases, companies will postpone investments," Casillas said, but added that he thought Trump's actual policies will fall short of his rhetoric, not least because unwinding trade with Mexico is easier said than done."I don't think Trump will do a lot of the things he said he will do," he said.

Others were more pessimistic.

Morgan Stanley analysts said in a note that the fallout from a Trump presidency would have "deep ramifications" for the equity market and that foreign investment could stall.

"Risks of a hard landing in Mexico have clearly risen," the bank's analysts said.

But for now the market pulled back from its initial panic. The peso recovered from its low after Trump took a measured tone in his victory speech and did not invoke any of his threats against Mexico, analysts said.

Mexico's benchmark IPC stock index fell more than 3.0 percent initially, but pared losses and closed down 2.23 percent.

"The market has calmed down a bit and given the benefit of doubt to a more conciliatory Trump," said Marco Oviedo, an economist at Barclays in Mexico City.

Mexican-based economists had expected a snap interest rate rise, but central bank Governor Agustin Carstens told a news conference on Wednesday morning the bank would take any necessary measures pending market conditions.

He said it would hold a monetary policy meeting as scheduled on Nov. 17, but did not announce any immediate steps to support the currency. Mexico has already raised its benchmark interest rate three times this year to support the peso.

Finance Minister Jose Antonio Meade said authorities were monitoring the situation and would act if needed.

The central bank hiked its key interest rate in September by 50 basis points to 4.75 percent to anchor inflation expectations following the peso's creeping depreciation.

Mexico has more than $175 billion in foreign reserves, and Carstens said last month he would consider using a $90 billion International Monetary Fund flexible credit line "in the event of an external shock.

(Additonal reporting by Jamie McGeever and Sujata Rao in London and Gabriel Stargardter and Lizbeth Diaz in Mexico City; Editing by Chizu Nomiyama and Jonathan Oatis)

http://www.reuters.com/article/us-me...-idUSKBN1332MG

Business News | Wed Nov 9, 2016 | 6:27pm EST
Mexico's Carstens says ready to act to protect economy


Governor of the Bank of Mexico Agustin Carstens delivers a speech at National Palace after U.S. Republican candidate
Donald Trump homes in on an unexpected victory in the presidential election, in Mexico City, Mexico,

November 9, 2016. REUTERS/Edgard Garrido

Mexico Central Bank Governor Agustin Carstens said on Wednesday that local policymakers have a series of tools they could use to protect the economy, if needed, following the election of Donald Trump as U.S. president.

Carstens, speaking on local radio, said it was not clear how Trumps campaign's pledges would translate into actual policy and that it was likely the U.S. president elect would soon realize the benefits to the U.S. economy from trade with Mexico.

(Reporting by Christine Murray)

http://www.reuters.com/article/us-us...e=businessNews

If the President of Mexico wants to "work" with the USA you had better begin by stopping the illegal invasion of our Country and stopping the gangs and drugs and stop it now...TODAY!

"Very hard times are coming to Mexico"? You ain't seen nothing yet because we have had it with your extortion and abuse of OUR generosity to your people and your Country. We give you billions in aid...it has been a ONE-WAY street! We are sick of you bleeding us dry, sick of your corruption, your gangs, your people disrespecting our Laws. IT IS OVER!

BUILD THE WALL AND TURN THEM RIGHT BACK AROUND.

Of course they are nervous as they are going to see the biggest influx of returning Mexican citizens they have ever seen. Yes we should heavily tax remittances back to Mexico to pay for the wall while they are still here. But we can also use the tax on imported goods from Mexico as well and we should surely have the money for that big beautiful wall.