The exchange rate closed at 19.9318 pesos per dollar, According to Banxico, with a marginal appreciation of 0.06%. Although, so far this year, The peso has depreciated by more than 17% in a context of political risks surrounding the judicial reform proposed by President Andrés Manuel López Obrador, whose main feature is the election of judges by popular vote.
During the day, the exchange rate surpassed the psychological barrier of 20 pesos per dollar, while Morena and its allies were preparing to discuss and vote on the reform of the judicial power in the Senate.
“We will closely follow news about the Mexican Senate, and we cannot help but notice that the elections in the United States are approaching,” Intercam Casa de Bolsa said in a note to its clients.
Analysts fear the legislative changes could weaken Mexico’s justice system, jeopardizing the business climate and the ability to attract new investment to Latin America’s second-largest economy.
Since the June elections, when the overwhelming victory of the ruling party opened the door to the approval of a package of reforms promoted by the Government, the once-named “super peso” has accumulated a loss of 17%, one of the worst performances in the year among a basket of global currencies.
The peso’s depreciation also occurred after the release of mixed figures from the US labor market, which precede an expected non-farm payroll report scheduled for Friday and which could shed more light on the Federal Reserve’s next steps.
Risks for the peso in the coming months
According to Monex, the risks for the Mexican currency go beyond local political unrest and estimates that the exchange rate has resumed its historical volatility. This will continue in the coming months due to the elections in the United States. It estimates, in an analysis note, that the parity will reach 20.50 pesos per dollar by the end of September.
In the external environment, there is a risk of “a greater exit of carry trade positions (although to a lesser extent than what was observed in August, since a quarter would be missing), in addition to the electoral process in the USA (…) in the coming months both candidates could make comments on the trade relationship between both countries, remembering that attention will focus on the review of the T-MEC towards 2026,” explained Monex.
