Over the past three months, the Mexican peso has experienced a notable decline, raising concerns about its potential trajectory for the remainder of the year. Analysts warn that the currency could face further depreciation, driven by a series of key events and economic decisions that will unfold in the coming months. Four critical factors are expected to play a decisive role in determining the peso’s recovery or continued decline.
1. Impact of Judicial Reform on Market Sentiment
The first factor influencing the peso’s future is the reaction of markets and governments to upcoming judicial reforms. According to Enrique Quintana, a respected economist, the mere anticipation of these reforms has already exerted downward pressure on the peso. The reforms, which are expected to be approved soon, are likely to impact investor confidence significantly. Should the reforms be perceived negatively, the peso could experience further depreciation. Quintana noted that once these reforms are implemented, the Mexican currency may face additional challenges, leading to another potential drop in value.
2. Claudia Sheinbaum’s First Presidential Address
On Tuesday, October 1, President Claudia Sheinbaum is scheduled to deliver her first speech as the head of state. This address is anticipated to be a critical moment for the Mexican peso, as investors and market participants will closely monitor her message for signs of economic confidence or uncertainty. The tone and content of Sheinbaum’s speech could either reassure investors, stabilizing the peso, or exacerbate concerns, leading to further currency volatility. Market reactions to her policy announcements and economic outlook will be pivotal in determining the peso’s short-term trajectory.
3. U.S. Election Outcomes and Their Impact on the Peso
The upcoming U.S. elections on November 5 present another significant variable for the Mexican peso. The outcome of these elections will have far-reaching implications for Mexico’s economy and its currency. If former President Donald Trump were to win and follow through on his campaign promises, including the imposition of tariffs and stricter border controls, the U.S. dollar could strengthen, putting additional pressure on the peso. Conversely, if Kamala Harris were to secure the presidency, the peso might experience a more favorable environment, with expectations of more stable U.S.-Mexico relations. Quintana suggests that a Harris victory could bring “greater serenity” to the markets, potentially aiding the peso’s recovery.
4. Economic Package and Fiscal Policy
The final factor to watch is the economic package that the Mexican government plans to present on November 15. This package will outline the fiscal policies for the upcoming year and is expected to include measures aimed at reducing the fiscal deficit from 5.9% to 3%. The success of these measures will be crucial in determining the peso’s strength. If the government’s plans are seen as credible and effective in addressing the fiscal deficit, it could bolster confidence in the peso. However, if the measures fall short of market expectations, the currency could face further depreciation.
