The Peso Hits Yearly Low Against Dollar Amid Morena’s Judicial Reforms Debate
In a recent analysis by ING’s FX strategist Chris Turner, the Peso closed at its lowest levels of the year against the dollar due to concerns over the ruling Morena party’s constitutional reforms, particularly focusing on the judicial reforms currently in debate.
The proposed reforms, which include the election of judges, including Supreme Court judges, by popular vote, have raised alarms among investors. While outgoing President AMLO argues that the reforms aim to combat corruption within the judiciary, many fear that it could lead to a dangerous concentration of power.
Investors are on edge as the reforms passed the committee stage without any significant changes, leading to expectations of increased Peso volatility in the coming weeks as the debate continues in Congress. Unlike Brazil, where the central bank may raise rates soon, the Peso is unlikely to receive any support from Mexico’s central bank, Banxico, which is focused on lowering rates.
The outcome of Banxico’s inflation report, released today, could further impact the Peso’s performance. If the report supports Banxico’s optimism for lower core inflation, it may have a negative effect on the Peso.
In conclusion, the ongoing debate over judicial reforms and the central bank’s monetary policy decisions will continue to influence the Peso’s value in the near future. Investors should closely monitor these developments to make informed decisions regarding their finances.