Following central bank governor Agustin Castens’ comments earlier in the day that “intervention is a tool to smooth changes in currency value,” and “Trump’s win has created uncertainty on Mexico’s growth model,” Mexican Peso traders have come up with unusual solution: instead of dumping billions in intervention with no effect, buy Twitter and shut it down.
As Bloomberg reports, the strange idea has a certain logic to it…
It goes like this: Instead of spending its precious reserves to defend the peso, Mexico should just buy Twitter Inc. — at a cost of about $12 billion — and immediately shut it down.
The notion made the rounds this week after the central bank revealed it had already blown through $2 billion of reserves in a largely futile effort to shield the peso from a steady stream of anti-Mexico Tweets from Donald Trump.
“I would suggest they do it fast,” joked Juan Carlos Alderete, a foreign-exchange strategist at Banorte-Ixe in Mexico City. “Because we can barely afford it now.”
Of course this is unlikely to happen, but, quite frankly, it has more chance of success than the vicious circle Mexico is about to find itself in.
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