Mexico nets $17 billion on Trump-led peso decline

The Mexican federal government received 321.7 billion pesos, or $17.1 billion, from its central bank’s yearly profits, driven in large part by a Trump-triggered plunge in the peso’s value.

Banxico, the country’s central bank, on Wednesday reported record-breaking profits, which by law are shared with the Secretariat of Finance and Public Credit, the country’s equivalent of the Treasury Department.

Banxico’s record-breaking surplus is more than $4 billion higher than last year’s, reported Bloomberg.

{mosads}A 20 percent drop in the peso’s value against the dollar boosted the country’s foreign currency reserves, stimulating Banxico’s bottom line.

The decline was mostly due to fears of what President Trump’s election would mean for the Mexican economy.

At least 70 percent of the shared profit will be used to reduce the government’s debt burden, and the rest will go to a budget stabilization fund or to bolster the government’s finances, reported Bloomberg.

Aside from the country’s financial woes due to slow recovery from the 2008 financial crisis and uncertainty after Trump’s election, public debt has been creeping up in the last two administrations.

The windfall will reduce the debt-to-GDP ratio in 2017 from 50 percent to 49 percent. 

“It’s almost 1.6 percent of the country’s [gross domestic product] and, by law, 1.1 percent of GDP will go to reducing the deficit. It’s definitely positive,” Marco Oviedo, head of Latin America economic research at Barclays Plc told Bloomberg.