MXN: Judicial reforms take their toll – ING
The Peso closed at its lowest levels of the year against the dollar yesterday as investors continue to take a dim view of the ruling Morena’s party constitutional reforms, ING’s FX strategist Chris Turner notes.
The judicial reforms are currently in focus
“Very much in focus currently are the judicial reforms centered on judges – including Supreme Court judges – being elected by popular vote. Outgoing President AMLO says his reforms seek to reduce corruption in the judiciary. Many others say the reforms represent an alarming concentration of power.”
“Worrying for investors is that these judicial reforms passed the committee stage on Monday without being watered down at all. And we should expect more Peso volatility over coming weeks as the reforms are debated in Congress as the government seeks to secure a two-thirds majority in both the lower house and the Senate.
“And unlike in Brazil where the central bank could well be hiking rates on 18 September, the Peso looks unlikely to receive any support from the central bank. Here Banxico is trying to steer a clear course to lower rates. Let’s see whether Banxico’s inflation report released today adds weight to Banxico’s optimism on the path to lower core inflation – probably a Peso negative if it does.”
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FXStreet Insights Team
FXStreet
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