On Tuesday, the exchange rate surpassed the 20 pesos per dollar mark, driven by increased risk aversion toward Mexico due to the potential approval of reforms to the Judicial Power Law.
In wholesale market operations, the peso registered a depreciation of 0.99 percent or 19.72 cents, with an exchange rate of 20.0911 per dollar, marking the worst level for the Mexican currency since October 19, 2022, according to figures from the Bank of Mexico.
In the spot market, the exchange rate reached a low of 20.0070 and a high of 20.1190 pesos per dollar, according to Banxico data. Meanwhile, in retail sales to the general public, the dollar was sold for as much as 20.56 pesos, as seen at Citibanamex branches.
According to "México ¿cómo vamos?", increased risk aversion among investors due to uncertainty is driving capital toward safer assets, leading to a depreciation of the peso.
Gabriela Siller Pagaza, Director of Financial Economic Analysis at Grupo Financiero Base, commented that since August, there has been a lower trading volume of the peso in the foreign exchange market.
She explained that the upward pressure on the exchange rate in Mexico was due to the heightened risk aversion toward the country, as the probability of the Judicial Power reform being approved in the Senate has increased.
Grupo Financiero Base estimates that this reform could cost 1.9 percent of Mexico's GDP due to the temporary or indefinite postponement of new investments that were planned for the coming years.
The institution added that another risk factor is the potential decrease in the reinvestment of profits by foreign companies operating in the country.