Mexico’s Judicial Reform Advances, USD/MXN Expected to Rise
Mexico’s judicial reform took a significant step forward as the lower house of parliament approved the legislation’s basic text. While some details are still up for debate and potential changes, Commerzbank’s FX strategist Michael Pfister believes the core of the reform will likely remain unchanged.
According to Pfister, the comfortable majority of the coalition in the lower house makes the approval unsurprising. The upcoming Senate vote may bring more excitement, but recent progress, including two opposition MPs joining the alliance, leaves the coalition just one vote shy of the needed 2/3 majority.
Despite the increasing clarity on achieving the required majority, the peso is expected to face continued pressure. Incoming president Claudia Sheinbaum’s call for more time has raised hopes, but growing opposition to the reform, including Supreme Court judges joining a strike and claims of NAFTA violations, could further weigh on the peso. As a result, Pfister predicts that USD/MXN will likely reach higher levels in the near future.
Analysis: The approval of Mexico’s judicial reform legislation has implications for the country’s legal system and political landscape. Investors should closely monitor developments as the reform process unfolds, as potential changes could impact the Mexican economy and currency. Additionally, the USD/MXN exchange rate is likely to be influenced by ongoing political dynamics and opposition to the reform. For individuals with investments in Mexico or exposure to the peso, staying informed about these developments is crucial for making informed financial decisions.