Lawmakers want to begin discussions on reforms so they can be voted in September, when a new congress is seated, lawmaker Ignacio Mier said in video shared on X by journalists Azucena Uresti and Joaquin Lopez Doriga.
The comments sent the peso quickly sliding, with the currency falling more than 2.7% to 18 per dollar, by far the worst performer among majors. A gauge of the currency’s one- month implied volatility also jumped 3% to 14.2% after the post.
“Volatility is going to be here to say,” said Brad Bechtel, global head of FX at Jefferies in New York. “It could be a wild time in the MXN for a while.”
AMLO’s Morena party won the Sunday elections in a landslide, getting more than two-thirds of the lower house of congress and falling slightly short of that in the Senate. The outcome surprised investors, who are concerned about proposed reforms that could increase state meddling on the economy and remove checks on the ruling party’s power.
The currency, which had become a favorite of carry traders,
tumbled earlier in the week after the election.
“The desire to go hard at reforms this way is a sign that perhaps Morena will push for items, enjoying the lack of checks and balances from opposition, to deviate from business interests that have helped in propping up what was the Super Peso effect,” said Juan Perez, director of trading at Monex USA.
