Markets are also concerned about Mexico’s current budget deficit equivalent to about 6% of GDP, and payments to the country’s debt-laden state-owned oil company, Pemex.

Mexico also continues to struggle with persistently high inflation of nearly 5%, despite high domestic interest rates of 11%.

Join me on a short 5% long wave.

Traders are worried about the 'reforms' the new government has in mind. In other words spending that will increase the deficit and weaken the peso. The current account deficit in Mexico has been less than the US, but that could change. Morena won big which means they can pass legislation. It is potentially similar to the first two years of the Biden administration when the democrats controlled both the senate and congress. We got the so called inflation reduction act that added to the deficit. The Federal Reserve Bank is combatting the inflationary effects of deficit spending with interest rate hikes. This was all supposed to be transitory and the Fed would lower rates later this year, but so far inflation has not come down enough for that to happen.

Thanks. I have not read anything on the topic, but this sounds plausible. Most of the reports in the past have focused on bullish manufacturing in Mexico. I think the long trend will still be with a fairly strong Peso. This blip just might be a "welcome new president" blip.
Mexico has a loan rate of what??, about 11.5%. The U.S. would come unglued if that was our interest rate.

Is the party over for the "Súper Peso"?

https://www.bloomberg.com/news/articles/2024-06-07/worst-week-in-four-years-makes-super-peso-global-laggard?utm_source=website&utm_medium=share...