The Mexican peso depreciates again due to fears of control by Congress

The Mexican peso depreciates again due to fears of control by Congress

The Mexican peso depreciated on Tuesday for the second consecutive day Despite the Government's efforts to calm market concerns about the possibility of the ruling party having an absolute majority in Congress, which would allow him to promote profound reforms to the Constitution.

In a brief call with investors, the Secretary of the Treasury, Rogelio Ramírez de la O, said that he will remain in office for a time during the administration of the ruling party Claudia Sheinbaum, who swept the presidential election on Sunday, and assured that The economic policy of the next Government will be focused on macroeconomic stability and fiscal prudence.

The Mexican peso was trading at 17.8590 units almost at the end of business, with a loss of 1.06% compared to the Reuters reference price on Monday, although in the early hours it weakened to 18.2010, a level not seen since October last year.

“This type of message is a good exercise, but the uncertainty about what can happen with Congress is there,” said Gerardo Copca, analyst at the consultancy MetAnálisis. “What is worrying is the speed with which it has risen (weakened the peso against the dollar),” he added.

Ramírez de la O reiterated that the incoming administration will be respectful of the autonomy of the central bank and the rule of law and will facilitate local and foreign private investment.

After his message, the currency briefly advanced to around 17.70 units, and then gave ground again, also affected by a general weak performance of the rest of the main currencies in the region.

In his daily press conference, the outgoing president, Andrés Manuel López Obrador, attributed the rapid depreciation of the peso after the elections to “external factors” already “disinformation” in the financial market, adding that the situation would soon normalize.

The currency lost 4% on Monday, its worst session since the pandemicafter learning of Sheinbaum's overwhelming electoral victory and that a coalition led by his party Morena was poised to dominate Congress, paving the way for the advancement of controversial constitutional changes that López Obrador has proposed.

The benchmark S&P/BMV IPC stock index .MXX rose 3.24% to 53,485.62 points, due to opportunity purchases after collapsing more than 6% the previous day, also its largest daily drop since the pandemic.

In the debt market, the primary yields of Treasury Certificates (Cetes) rose in most of their terms in the weekly auction of government securities. The 28-day Cete benchmark rate was placed at 11.04%, one basis point above its previous auction.