The news that Donald Trump will become the 45th President of the United States has rattled global financial markets and seen the Mexico peso hit a record low, according to a London Business School economist.
Linda Yueh, Adjunct Professor of Economics, London Business School, made the comments whilst speaking on BBC News earlier today:
“We saw a change of mood overnight reflected in the markets. Early polls had Clinton winning, but the surprise when Trump began to lead made markets rethink what economic policy would be in the future,” said Dr Yueh.
“Most Americans have now elected Trump. And some businesses believe his economic policies and tax cuts will put America on a better track. You see that reflected on the FTSE 100, which is an international gauge. But, let's not overstate it.
European markets are still wary about Trump’s promises including doubling economic growth, explained Dr Yueh.
“The Asian markets remained down substantially, around 5%, which is due to concerns with trade. Trade is the one area that the President has the authority to change without congressional approval. Approval is needed to pass trade agreements, but not to pull out or renegotiate them,” Dr Yueh said.
“The emerging market currencies have bounced back but we saw a record low for the Mexican peso, which has recovered somewhat but still trading around 20 pesos to the US dollar. This reflects the fear that Trump will add a great deal of protectionism into the world system that is already quite worried about globalisation. The peso is a good indicator because it’s a liquid emerging market currency.
“We will see much more reaction from currency markets throughout the day as the global impact of Trump comes mainly through trade and also US interest rates.”