The judicial reform seems to be carried out after all – Commerzbank

Mexico’s judicial reform took another step forward yesterday when the lower house of parliament approved the basic text of the legislation. While the details of the reform will still be debated and voted on in the coming days, meaning there could still be changes, most of the reform is now likely to remain unchanged, notes Michael Pfister, FX strategist at Commerzbank.

USD/MXN is likely to test higher levels in the near term

“This should come as no surprise given the coalition’s comfortable majority in the lower house. The vote in the Senate will probably be more interesting, but here, too, the coalition has made progress. Two opposition lawmakers recently joined the alliance, leaving it just one vote short of the 2/3 majority it needs. The missing vote is likely to be found in the coming weeks.”

“Although it has become clearer in recent weeks that the required two-thirds majority will be reached and the Alliance’s desire to move through changes as quickly as possible, the peso is likely to remain under pressure. On the one hand, incoming president Claudia Sheinbaum has recently raised her hopes, asking for more time.”

“On the other hand, there is growing opposition to the reform, which could put even more pressure on the peso. For example, Supreme Court justices recently joined the judicial staff strike, while there are also claims that the reform violates the North American Free Trade Agreement. Therefore, we believe that USD/MXN is likely to test higher levels in the coming days.”