Mexican president announces constitutional reform, Mexican peso plummets


Recently, the Mexican President announced a series of constitutional reforms, but the market was unimpressed, and the Mexican peso consequently fell.

Claudia Sheinbaum, Mexico's president-elect, stated on Monday that she will encourage broad discussion on proposed constitutional reforms, including a judicial reform that has unsettled the market. The discussions will take place before the next congressional session begins.

This judicial reform would replace current appointed Supreme Court justices, as well as some lower court judges, with elected ones. Critics argue that this will fundamentally alter the balance of power in Mexico.

Sheinbaum, at a press conference following a meeting with outgoing President Andrés Manuel López Obrador, said this reform would be among the "first possible" reforms to pass, along with some enhanced social welfare measures.

She added that she does not believe the proposed reform will affect the peso, despite the currency's sharp drop after she won the election earlier this month.

However, as Sheinbaum spoke, the peso fell nearly 2% in international trade to around 18.55 per dollar.

Analyst Gabriela Siller from Banco Base stated on the platform X, "Given the current uncertainty, it is not impossible for the peso-dollar exchange rate to reach 20 pesos this year."

These measures are part of a series of constitutional reforms proposed by López Obrador in February, which also include eliminating some key regulatory agencies.

At the time, these proposals did not cause market turmoil, but alarm bells rang when the ruling coalition aimed to secure the congressional supermajority needed to pass the reforms in the June 2 election.

The Morena-led coalition secured a two-thirds supermajority in the lower house but fell just short in the Senate. However, analysts believe the additional votes could be negotiated.

While the newly elected legislators will take office in early September, Sheinbaum will not be sworn in until a month later, potentially giving López Obrador and the legislators an opportunity to push through these reforms.



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