The Mexican Peso (MXN) is facing a decline in its major trading pairs following the approval of a contentious set of reforms by the Mexican lower house. This decision has raised concerns among investors about the potential negative impact on the country’s economy.
Investors are worried about the implications of the reforms on the judiciary, as they believe it could compromise its independence, undermine democracy, and harm international trade and foreign investment. As a result, the Peso is being sold off in the market.
Mexican Peso Depreciates After Congressional Reforms
The Mexican Peso experienced a weakening trend as lawmakers in the lower house of Mexico passed a controversial bill aimed at reforming the judiciary system. The bill proposes electing judges through popular vote instead of appointment, with critics arguing that it could jeopardize the independence of the judiciary and fail to address corruption effectively.
Despite protests and opposition to the reforms, the bill was approved by a significant margin in the lower house. The reforms will now move to the upper house for further debate, where the government is expected to secure approval despite being one seat short of a majority.
From a financial perspective, the reforms could lead to a decrease in foreign investment, resulting in a reduced demand for the Peso and further depreciation of the currency. This could have repercussions on the economic stability of Mexico and its relationship with other countries, including the United States.
Technical Analysis: USD/MXN Breaks Above 20.00
The USD/MXN currency pair has resumed its upward trend, breaking above the key level of 20.00. Technical analysis suggests that the pair is likely to continue moving higher within a rising channel, with the next target projected in the 20.60s range.
USD/MXN Daily Chart
This chart confirms the bullish trend in USD/MXN, indicating potential further gains in the near term.
Overall, the approval of the controversial reforms in Mexico has sparked concerns among investors and led to a depreciation of the Mexican Peso. This could impact foreign investment in the country and the stability of its economy. Additionally, the strengthening of the USD against the MXN suggests a bullish outlook for the currency pair in the short term.