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April 24, 2017

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Mexican peso hits record low due to Trump, gas prices

MEXICO CITY -- The Mexican peso sank to another historic low on Tuesday in the wake of an unpopular gasoline price hike and U.S. President-elect Donald Trump's latest protectionist threats against automakers.

The Mexican currency shed 1.59 percent, trading at 22.00 pesos per dollar compared with 21.70 on Monday.

The peso has fallen since Trump won the Nov. 8 U.S. presidential election as investors fret over his threats to impose tariffs on companies that ship jobs to Mexico and his pledge to renegotiate the North American Free Trade Agreement (NAFTA).

Last week, U.S. automaker Ford scrapped plans for a new US$1.6 billion factory in Mexico that Trump had criticized, though the company said the decision was business-related.

The Republican property tycoon, who succeeds Democrat Barack Obama as president on Jan. 20, threatened to impose tariffs on General Motors and Japanese rival Toyota last week.

Mexico has also been rocked by daily protests over a fuel price increase.

President Enrique Pena Nieto announced an agreement with businesses on Monday to ensure that prices of basic goods do not increase as well.

"But the heaviest is Mr. Trump, who is hitting us very hard," said Mercedes Sanabria, analyst at the Mexican foreign exchange firm Casa de Bolsa Ve por Mas.

The central bank sold dollars last week to prop up the peso, "but it's not enough to mitigate the dollar's increase due to the uncertainty regarding our country," she told AFP.

Juan Musi, analyst at CI Estrategia, said markets are also on edge on the eve of a news conference Trump will give on Wednesday.

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