MEXICO CITY.- Los financial markets in Mexico have registered significant falls this Monday after the resounding victory of Claudia Sheinbaum in the presidential elections and his coalition’s projected dominance in Congress, which would allow for important constitutional reforms.
The Mexican peso suffered a depreciation of 4.3%, closing at 17.7 units per dollar, compared to 16.96 units last Friday, according to data from the Bank of Mexico (Banxico).
The Mexican Stock Exchange (BMV) experienced a fall of 6.01%, equivalent to 3,315.85 points, placing the Price and Quotation Index (IPC) at 51,863.39 units at the close of the session.
Until recently, the dollar had remained below 17 pesos, favored by high interest rates in Mexico, the influx of remittances and foreign direct investment.
“The markets have reacted negatively to the electoral results, since Morena is likely to obtain a qualified majority in Congress, which would facilitate the approval of pending constitutional changes,” Víctor Ceja, chief economist at Valmex, explained to AFP.
Gabriela Siller, an analyst at Banco Base, stressed the need for Sheinbaum to send a message of calm to the markets: “The ideal would be for him to announce that the autonomy of the Bank of Mexico will not be altered, fiscal discipline will be maintained and the division of powers nor autonomous bodies,” he indicated.
With 90% of the votes counted according to the National Electoral Institute (INE), Sheinbaum, 61, leads with 59% of the votes, surpassing her closest rival, the center-right Xóchitl Gálvez, by thirty points.
The left-wing coalition, made up of Morena, the Green Party and the Labor Party, has two-thirds of the Chamber of Deputies and will probably also reach this majority in the Senate.
This would allow the ruling party to implement significant constitutional reforms that the outgoing president, Andrés Manuel López Obrador, failed to specify. Among these reforms, “Plan C” stands out, which contemplates a profound restructuring of the Judiciary so that judges and magistrates are elected by popular vote.
Source: With information from AFP
