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The US dollar exchange rate is seen on the board of a bank in Mexico City.

Mexico's peso sank sharply on Thursday in its biggest two-day loss in 22 years as investors worried about how U.S. President-elect Donald Trump's policies could hit exports from Latin America's No. 2 economy.

The peso lost more than 3.5 percent to trade around 20.60 per dollar. That follows a tumble during a sell-off after Trump's unexpected victory on Wednesday.

The dollar has gained around 12 percent against the peso in the last two days. That puts the peso on track to post its biggest two-day plunge since its 1994 devaluation.

Read More: Mexico’s Richest Man Lost $5 Billion After Trump’s Victory

Citigroup strategist Dirk Willer said he expected the peso to keep weakening to around 22 per dollar.

"Given the nature and size of the shock, the sell-off is unlikely to last only a day," Willer wrote in a note to clients.

The dollar has strengthened about 19 percent against the peso this year, even more than a nearly 17 percent gain for all of 2015.

During the last decade, the peso, as the most liquid emerging market currency, has been a proxy bet for all emerging markets and risky investments like stocks.

But the peso diverged for a second day in a row as stocks rose in the United States, Mexico's top trading partner.

If Trump increases tariffs on Mexican imports into the United States as he promised during the campaign, it could impede growth for the Latin American country's economy.

So far, Mexican officials have held back from taking any action to support the peso.

The central bank may raise interest rates next week for the fourth time this year to make debt more attractive to foreign investors and backstop currency losses that could drive inflation higher.