Mexican Peso Falls More Than 4% and Has Its Worst Day Since March 2020 Following Morena’s Victory

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The Mexican peso weakened against the dollar, recording its worst day since March 2020 following Morena’s electoral victory this Sunday and the nervousness generated by the fact that it will have a majority in Congress.

According to data from the Bank of Mexico (Banxico), the national currency ended the session with a depreciation of 4.21% against the dollar, with the exchange rate at 17.7141 units per dollar.

With this, the Mexican peso had its worst session against the US currency since March 17, 2020, when it registered a fall of 5.15%. It also reached its worst level since November 9 of last year, when it was at 17.8152 units.

During the day’s operations, the peso touched a minimum of 16.91 and a maximum of 17.75 per dollar, according to Bloomberg data.

In retail, the dollar is sold at 18.17 pesos at Citibanamex windows, 78 cents more expensive than at the close of the previous session.

The dollar index, which measures the performance of the currency against a basket of the six most traded currencies, fell 0.55% to stand at 104.10 units.

Morena’s Victory Weighs on the Peso

Although the market had already anticipated the victory of candidate Claudia Sheinbaum from the Sigamos Haciendo Historia alliance —comprised of Morena, PT, and PVEM—, the alliance’s triumph in Congress has made investors nervous.

The peso was affected by investor nervousness over the electoral results, as preliminary counts point to a victory for Claudia Sheinbaum of the Moderna Party, while the same party and its allies obtained a qualified majority in Congress, noted Monex Financial Group.

Experts mentioned that the victory in both the Senate and the Chamber of Deputies has concerned the market due to the possibility of constitutional changes being enacted at the start of the next federal administration.

For the rest of the week, investors will be focused on the publication of some economic data, highlighting Mexico’s National Consumer Price Index (INPC).

According to Gabriela Siller, Director of Economic Analysis at Grupo Financiero Base, 80% of the peso transactions against the dollar are speculative, and the risk-reward balance that investors set has changed with the election result.

Source: El CEO