Puerto Vallarta, Mexico – The Mexican peso closed trading on Tuesday with notable losses, reflecting increased investor nervousness surrounding the ongoing discussion of a controversial judicial reform in the Congress of the Union and anticipation of critical employment figures from the United States.
The local currency depreciated to 19.8711 pesos per dollar by the close of the day, marking a 0.39 percent decline from Monday’s closing rate of 19.7944 pesos per dollar, according to official data from the Bank of Mexico (Banxico). This represents a loss of 7.67 cents for the peso, underscoring the impact of political uncertainty and global economic anxieties on the Mexican market.
Throughout the trading session, the dollar fluctuated within a range of 19.7287 to 19.9850 pesos. Meanwhile, the Intercontinental Exchange’s Dollar Index (DXY), which measures the greenback against a basket of six major currencies, edged up by 0.11 percent to 101.77 points, indicating a slight strengthening of the U.S. dollar in international markets.
Political Uncertainty and Market Reaction
The peso’s decline comes as a majority of the justices of the Supreme Court of Justice of the Nation (SCJN) voted on Tuesday to suspend their activities in response to a contentious judicial reform currently under debate in an alternate venue to the Chamber of Deputies. The reform, which includes a proposal to elect judges and magistrates by popular vote, has sparked significant controversy and heightened political tension.
Morena deputies, along with their allies from the Labor Party (PT) and the Green Party (PVEM), are pushing to approve the judicial reform in general on Tuesday and address the reserved articles on Wednesday, with the goal of sending the bill to the Senate, where they also hold a majority.
The uncertainty surrounding the reform has triggered anxiety among investors, leading to a sell-off in peso-denominated assets. “What has happened politically, particularly the events related to the reform of the Judicial Branch, has unleashed nervousness and distrust among investors, leading them to sell positions in pesos,” stated Intercam Casa de Bolsa in a note to clients.
José Feliciano González, a professor at the Escuela Bancaria y Comercial (EBC), echoed this sentiment, noting that “investors are exhibiting erratic behavior. The discussion of the reform and information on U.S. manufacturing have encouraged short-term trading and a tendency to push the peso toward the 20-peso mark.”
U.S. Employment Data in Focus
While domestic traders remain preoccupied with legislative developments, global markets are increasingly focused on upcoming U.S. employment data, particularly the non-farm payrolls report scheduled for release on Friday. This data is expected to provide crucial insights into the health of the U.S. labor market and guide the Federal Reserve’s next moves regarding interest rates.
Investors are closely monitoring these economic indicators, hoping for signals that might prompt the Federal Reserve to implement an anticipated rate cut. Despite recent indicators showing signs of resilience in the U.S. economy, uncertainty persists.
“Volatility has slowed down a bit in the dollar against the Mexican peso, but in the short and medium term, the dollar maintains an upward trend and is consolidating at around 19.82 pesos. The peso continues to struggle to break above the 20-peso mark,” observed Alexander Londoño, an analyst at ActivTrades.
Outlook
The peso’s future trajectory remains uncertain, with political and economic factors both domestically and internationally likely to influence its movement. As the debate over the judicial reform continues and U.S. employment data is released later this week, the Mexican currency may face further fluctuations.
Investors and analysts alike are bracing for continued volatility in the short term, with the peso’s performance closely tied to developments in both Mexico’s political landscape and the broader global economy.
Puerto Vallarta, Mexico - The Mexican peso closed trading on Tuesday with notable losses, reflecting increased investor nervousness surrounding the ongoing discussion of a controversial judicial reform in the Congress of the Union and anticipation of critical employment figures from the United States.
