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Mexico peso reacts after election announcement

According to Reuters data, Mexican currency is trading at 20.15 peso per US dollar, reflecting a depreciation of 1.42 percent or 28.26 cents. On Friday, the dollar was being sold for 20.40 pesos at retail (in bank windows) with a gain of 2.25 percent.

According to analysts at Monex Casa de Bolsa, investors remain alert to the trade conflicts of the United States and China, while in Mexico they expect a reaction with the announcement of the presidential elections.

The peso began the week in a new phase of volatility after the victory of Andrés Manuel López Obrador as investors fear a less friendly approach to the market by the elected government beyond its soothing message.

The peso went from scoring an improvement to suffering losses in just hours after the result of the polls. López Obrador intended to show guarantees of economic stability in his first speech, but also mentioned the possibility of reviewing oil contracts, a factor that has generated nervousness among investors.

While investors follow the new movements after the elections, other pressures on the peso include the renegotiation of the North American Free Trade Agreement (NAFTA) and the strengthening of the dollar.

On July 6, tariffs come into force in the United States against imports of producer China amounting to $34 billion USD. On the same day, China is expected to report the entry into force of tariffs in retaliation against imports of US products in an equivalent amount. Commercial tension generates risk aversion, weakening currencies of emerging economies including the Mexican peso.