Volatility Weighing on the Peso

Mexico is the third-largest trading partner for the United States, so needless to say, there is much at stake here for both countries. The two countries have had strong economic ties through NAFTA, which has been in effect since 1994; most of the bilateral trade happens in the context of supply chains in which goods are manufactured across the border. If the United States were to pull out of NAFTA, that move would likely have adverse effects on an already battered peso.

For businesses handling cash flows to and from Mexico, strategies around currency conversion should not be treated lightly. Treasury and finance professionals should ensure that proper controls are in place to mitigate exchange-rate losses stemming from peso volatility. These may include the use of specific financial instruments, as well as comprehensive analytics platforms and related technological tools.