news agency
Electoral impact continues to sink the Mexican peso

Electoral impact continues to sink the Mexican peso

He Mexican peso falls for the second straight session after the ruling party’s unexpected landslide election victory injected local political risk into one of the world’s top carry trades.

The peso weakened 2.1% to 18.0583 per dollar as of 7:08 a.m. New York time, adding to its 3.8% loss on Monday, which was its worst one-day drop since June 2020. Mexico’s benchmark stock index fell 6.1%, the largest drop since the start of the pandemic.

President Andrés Manuel López Obrador’s Morena party and its allies came very close to achieving a supermajority in Congress. They won two-thirds of the seats in the Lower House and almost two-thirds in the Senate.

The outcome could allow the ruling coalition to pass constitutional reforms that could increase state interference in the economy, as well as remove checks on its power.

The overnight volatility of the Mexican peso jumps to September highs | Operators expect turbulence in the peso after vote

Although it was expected that the protégé of Lopez Obrador, Claudia Sheinbaum, easily won the elections, it was not expected that Morena and her allies would obtain such a wide margin of victory in Congress. The Mexican currency had been one of the best-performing major currencies this year and last, driven by high interest rates and the country’s ties to the U.S. economy.

Some analysts expected Sheinbaum to take a more market-friendly stance than his predecessor and mentor, but the prospect of constitutional changes injected fear into the market, said Gabriela Siller, head of economic research at Mexican bank Grupo Financiero Base.

Source: Gestion

You may also like

Hot News



follow us

Immediate Access Pro