Investing.com – He has received a new blow this Friday, June 7, now from the National Palace. Around 9:00 a.m., Mexico City time, the exchange rate soared to 18.39 pesos per dollar after the president of Mexico, Andrés Manuel López Obrador, has assumed that the reform of power Judicial will be carried out in this six-year term, when the next legislature begins.
“If we have to reform the judiciary, we are going to do it in an orderly manner, without authoritarianism, calling on everyone to talk about the issue from now on,” he said from the National Palace in his morning conference.
With this, the Mexican peso depreciated more than 2.3% against the US dollar, making it once again the most depreciated currency in this Friday’s session.
“The interpretation given by the market is that the reform goes regardless of the reaction of the prices of assets denominated in Mexican pesos”; said Jorge Gordillo Arias, director of Economic and Stock Market Analysis at CIBanco.
From Monday to Friday, after the election day in which Claudia Sheinbaum won the presidency and the ruling parties obtained a qualified majority in the Chamber of Deputies and a large majority in the Senate, the accumulated depreciation is already around 8%, according to with the data available on Investing.com.
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The reform of the Judiciary is one of the various reforms contained in the so-called “Plan C”, it would imply that the judges, magistrates and ministers of the Supreme Court would be elected by popular vote.
“Of all the reforms that we are proposing, the one that supposedly produces the most nervousness in the markets is that of the judicial branch, because the Judicial Branch is kidnapped, it is taken over, it is at the service of a minority of those at the top,” the president justified. who asserted that “justice is above markets.”
“What there will be going forward (in Claudia Sheinbaum’s administration) is the continuation of the changes that will naturally occur from the transformation that millions of Mexicans initiated,” he added.
These statements have once again generated high volatility in the exchange market, with the Mexican peso exceeding 18.00 pesos per dollar. The previous day, the coordinator of the Morena Deputies, Ignacio Mier, assured that the reforms proposed by the president, Plan C, would be discussed in September, with the legislature in which the ruling party will have a qualified majority.
“The president’s statements do not help the exchange rate. It is climbing and by overcoming the psychological barrier of 18.00 pesos per dollar, it can go to 18.50, which is the pessimistic scenario that we predicted before the elections that could occur in the event that the Presidency and the majority of Congress remained in the same party,” said Gabriela Siller Pagaza, director of Economic and Financial Analysis at Grupo Financiero Base.
The specialist explained that the reform of the Judicial Branch raises concern because it would take away powers from the Executive Branch. Furthermore, the reform that contemplates the disappearance of autonomous bodies raises concern as it would significantly deteriorate the business environment in Mexico and could even imply non-compliance with the USMCA, which could give rise to greater commercial controversies and a stricter review. in 2026.
The reform of the INE for democratic processes in the future is also of concern.
“We can anticipate that all of them weaken Mexico’s institutional framework, undermining counterweights and directing the state towards presidentialism. This adds additional uncertainty to the outlook, and risk aversion. If approved, we could see a significant increase in risk premiums, and it could result in investors demanding a higher return for the country’s productive investments, thereby weakening the attractiveness of our country,” mentioned Alejandra Marcos and Alejandro Fajardo, economists at Intercam Bank.
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