For a central banker, Augustin Carstens has a surprising penchant for metaphors. The Mexican Central Bank chief recently called Donald Trump, the Republican presidential candidate, a “cyclone.”
A cyclone that could sweep through the economy of his country, that is. But Carstens not only has a sense for rhetoric, he’s also a prudent person. And so he has taken precautions and laid out a contingency plan for the event that Mr. Trump is actually elected president of the United States.
The central bank head is already feeling the first gusts of wind. Since opinion polls have started giving Mr. Trump a realistic chance of winning, Mexican financial markets have been going crazy. A Trump presidency would be nothing less than a disaster for a country that ships nearly 80 percent of its exports to the United States. Mr. Trump doesn’t only want to build a wall up to 25 meters high along the Mexican border. He wants to cancel the North American free trade agreement NAFTA and impose tariffs on imports.
Fears of a Trump win are rampant across the global financial markets. “Should Trump actually win, a selloff is to be expected in global financial markets,” said Paul Richards, president of Medley Global Advisors, an information service for institutional investors.