Dollar tumbles against yen, euro on strong Trump showing

The dollar tumbled against the yen and euro while the Mexican peso fell off a cliff as polling results in the knife-edge US presidential race pointed to a strong showing by property mogul Donald Trump.
The greenback plunged 3.8 percent to 101.50 yen while it lost almost two percent against the euro, which bought $1.1224 in Tokyo trading.
The peso, which has become a proxy for the property mogul’s chances of becoming US president, slumped to below 20 against the dollar, an historic low.
Financial markets have favored Democrat Clinton over Republican Trump, whose wild policy pronouncements have sown uncertainty.
“Of course, I can’t say anything definite at the moment, but the market atmosphere reminds me of that five months ago,” Daisuke Karakama, market economist at Mizuho Bank said, referring to the Brexit shock.
“Mr Trump has made it clear that he hates a strong dollar, which is a threat” to the floating-rate system, he added.
His “inward-looking policy” was moving financial markets, Karakama said.
Analysts say Mexico’s economy could suffer under a Trump presidency because of his vow to renegotiate a free-trade deal, block migrants’ remittances to their homeland and make the Mexican government pay billions for a massive border wall.
“This is a huge movement, one of the biggest in recent years,” said Yukio Ishizuki, a senior forex strategist at Daiwa Securities.
“I don’t think it is the Mexico-must-pay-for-the wall comment made by Trump because it is not very realistic,” he added.
“Investors are more worried about him saying he would renegotiate the North American Free Trade Agreement (NAFTA). If the United States does that seriously, it would be more than just a great damage for Canada and Mexico.”
Concern in Japan, a close security ally of the US and a major trading partner, has also risen during the campaign on Trump’s opposition to the Trans-Pacific Partnership free trade agreement and call for Tokyo to pay more to support the alliance.

Source: Arab News