Mexico: Peso Takes a Dive After President Andres Manuel Lopez Obrador Doubles Down on Constitutional Reforms

Before he leaves office, Mexico President Andres Manuel Lopez Obrador has vowed constitutional reforms. However, this made the markets jittery as the Mexican peso's value plunged soon after his latest remarks regarding his plans for judicial and transparency reforms.

AMLO's constitutional reforms involve the dissolution of autonomous bodies, such as the government's transparency body, INAI. This has caused the Mexican peso to fall to 18.40 against USD as investors made their concerns about the president's plans very clear.

"The judicial power is hijacked, the service is taken over by a minority of those at the top," said Andres Manuel Lopez Obrador in his usual morning press conference. "I have already said it here, and they know it very well. It is even shameful, but there are ministers who are like employees of large corporations."

As FX Street pointed out, investors are always "extremely sensitive and volatile amid political uncertainty," such as what AMLO is bringing with his proposed constitutional reforms. This is also happening amid high inflation in the country that is currently exerting pressure on the Bank of Mexico (Banxico).

Mexico's Consumer Price Index (CPI) is also up by 4.69 in May, which is higher than April, which saw a 4.65% CPI. However, the core CPI dipped from 4.37% to 4.21%. There is now speculation that Banxico might cut its rates in June and depreciate the peso even further.

Mexico is still doing good, however, as its auto exports increased in May, though it is still less than in April. This is now considered to be a signal that the economy is feeling the impact of higher borrowing costs set by Banxico.

Mexico President Andres Manuel Lopez Obrador Vows To Pursue Constitutional Reforms

Despite the Mexican market taking a huge hit with his recent proclamations, Mexico President Andres Manuel Lopez Obrador is doubling down on the issue of constitutional reforms.

According to the Associated Press, these constitutional reforms are expected to happen after AMLO's MORENA Party won a two-thirds supermajority in the country's congress during last Sunday's elections. This is also ensured as his chosen successor, Claudia Sheinbaum, also won in a landslide. This is making him even more confident about passing the reforms.

AMLO pledged to continue to press for 20 constitutional changes even after he leaves office, though Sheinbaum herself has admitted, "It has not yet been decided. My position is that a dialogue will have to be opened, the proposal must be debated."

Mexico President Andres Manuel Lopez Obrador Will Reshape Country's Political Landscape

Earl Anthony Wayne, former US Ambassador to Mexico, spoke with The Dialogue regarding AMLO's proposed reforms and admitted that it will reshape politics in Mexico and noted that these would "protect and advance AMLO initiatives, concentrating more power in Mexico's president, reducing checks and balances in its democracy, introducing elections for judges and bolstering the military's public security role."

He added that these constitutional reforms "could well weaken Mexico's electoral, legislative and administrative institutions, give the government more concentrated economic power regarding energy and regulation, and impose costly programs on his successors."

This article is owned by Latin Post.

Written by: Rick Martin

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