Financial markets have reacted negatively to the election of Claudia Sheinbaum as Mexico’s next president, with the peso the major casualty.
The currency has depreciated ten percent to around 18.60 to the U.S. dollar since the June 2 election, its lowest level for more than a year.
The peso’s fall has largely been on concerns about the impact of a controversial package of 20 reforms President Andres Manuel Lopez Obrador seeks to enshrine in the constitution (often referred to as “Plan C”). The reforms include fundamental changes to Mexico’s judicial system and the National Electoral Institute that critics say would weaken democracy and alter the balance of power. The initiatives are stalled in the current congressional session.
After his Morena Party alliance picked up further seats in Congress in the June 2 election, Lopez Obrador said he would push the reforms through before he leaves office. The newly elected Congress takes office in September, a month before he steps down. Although the Morena coalition won a two-thirds majority in the lower house—required to change the constitution—it fell short in the Senate, and will need to find other allies to pass the reforms.
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