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The
peso hit a fresh five-week trough of 17.5020 to the dollar, its
worst drop since September 2020, LSEG data showed.
The latest losses mean the currency has weakened 2.4% since the
start of the year, a sharp turnaround for the unit, which was,
until recently, one of the few emerging markets currencies to
have gained ground against a strong dollar.
"In Mexico, the question is whether the Morena party has done so
well that it could command a super-majority and try to pursue
market non-friendly policies of constitutional reform," said
Chris Turner, global head of markets at ING.
Sheinbaum, a climate scientist and former mayor of Mexico City,
won the presidency with between 58.3% and 60.7% of the vote,
according to a rapid sample count by the electoral authority, in
what is set to be the highest vote percentage in Mexico's
democratic history.
Her victory had been widely anticipated, but the scale of
Morena's gains and the prospect of the ruling coalition
potentially clinching a super majority has taken markets by
surprise.
Securing a two-thirds super majority in both houses of Congress
would allow the group to pass constitutional reforms without
opposition support.
"That would enable Sheinbaum and Morena to push through
constitutional amendments, including those proposed by President
Lopez Obrador prior to the election," said Jason Tuvey, deputy
chief emerging markets economist at Capital Economics.
Lopez Obrador had doubled the minimum wage, reduced poverty and
oversaw a strengthening peso and low levels of unemployment -
successes that made him incredibly popular.
Sheinbaum has promised to expand the welfare policies that drove
his popularity and her triumph, but this will be a tricky task
while inheriting a hefty budget deficit and low economic growth.
(Reporting by Karin Strohecker, graphic by Sumanta Sen; editing
by Amanda Cooper and Bernadette Baum)
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