Mexico’s Sheinbaum to push forward with judicial reform, peso slumps

June 11, 2024
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MEXICO CITY — Mexican President-elect Claudia Sheinbaum said on Monday she would encourage broad discussions over proposed constitutional reforms, including a judicial overhaul that has spooked markets, before the next congressional session kicks off.

The judicial reform would replace an appointed Supreme Court with popularly elected judges, as well as for some lower courts, which critics allege would fundamentally alter the balance of power in Mexico.

Sheinbaum, speaking in a press conference following a meeting with outgoing President Andres Manuel Lopez Obrador, said the reform would be “among the first” that could be passed, along with some boosted social benefits.

She added she did not believe the proposed reforms would impact the peso, which tumbled following her election win earlier this month.

As Sheinbaum was speaking, however, the peso weakened by nearly 2% to around 18.55 per U.S. dollar in international trading.

“With the current scenario of uncertainty, an exchange rate of 20 pesos per dollar for this year can’t be ruled out,” analyst Gabriela Siller from Banco Base said on X.

Some of the measures are part of a slew of constitutional reforms Lopez Obrador proposed in February that would also eliminate key regulatory agencies.

At the time they did not cause market jitters, but investors sounded the alarm as the ruling coalition honed in on a congressional super-majority needed to pass constitutional reforms in the June 2 election.

The coalition led by MORENA secured a two-thirds super-majority in the lower house but fell just short in the Senate, although analysts believe those extra votes can likely be secured through negotiation.

While the newly elected Congress will take office at the beginning of September, Sheinbaum will not be inaugurated until a month later, which could give Lopez Obrador and lawmakers a window to try to enact the reforms.

“In the case of the judicial reform, (discussion) should be through the bar association, professors of law, the ministers and magistrates themselves,” Sheinbaum said.

She added she would name her cabinet next week, and that she would receive a team sent by U.S. President Joe Biden on Tuesday.

Mexico’s peso is now down 8% since the elections Sheinbaum and her party won in a landslide — its biggest plunge since the COVID-19 pandemic — while the country’s main stock index has fallen nearly 4%.

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