The dollar has already sank more than three percent against the yen today in extremely volatile trade in global markets, as the U.S. presidential election shows Donald Trump in the lead but is still too close to call.
Republican Trump won the key battleground state of Ohio on Tuesday, was the projected winner in Florida and led Democrat Hillary Clinton in a series of other states like North Carolina, in a surprisingly close race for the White House.
The dollar slumped 3.1 percent to the yen in a volatile day that saw it rise to earlier, when last-minute projections from the previous day put Clinton in favor.
The dollar fell 1.8 percent against the Swiss franc, another safe-haven currency.
“The catalyst behind the dollar’s slide was reports that put Trump ahead of Clinton in the battleground state of Florida,” said Junichi Ishikawa, senior forex strategist at IG Securities in Tokyo.
“Risk aversion is in the air with equities tumbling.”
The scene was reminiscent of the turmoil that engulfed global financial markets after the June Brexit vote, when British voters opted to leave the European Union in a decision that wrongfooted investors and bookmakers.
“No one in the market expected the results that we’re seeing so far,” said Kaneo Ogino, director at foreign exchange research firm Global-info Co in Tokyo.
“Even if in the case there is a Clinton comeback and she wins, the market already has reacted to the point where the dollar would have trouble climbing back. It’s mostly [to do with] dealing in the market now, with dealers staying out. It’s system trading, and it’s hard for anyone to catch up.”
The Mexican peso handed back earlier gains and fell to a record low versus the dollar, with U.S. currency moving up more than 11 percent against the peso.
The peso had suffered deep losses recently when the likelihood of a Trump victory appeared high. Trump has pledged to renegotiate the North American Free Trade Agreement (NAFTA) with Mexico and Canada, a move that could damage the economies of the export-heavy nations.
The Canadian dollar also fell to an eight-month low against the greenback.
Investor anxiety has deepened in recent weeks on the prospect of a Trump victory as the controversial businessman, an anti-establishment political novice, is seen as a risk to global growth as he has pledged to renegotiate trade deals, impose high import tariffs and stirred fears of a currency war with China.
The Republican candidate has also stoked uncertainty over his stance in foreign policy and immigration, while Clinton is seen by markets as a safe pair of hands and likely to ensure political and financial stability.
