USD/MXN Falls After Shock Resignation of FinMin

Carlos Urzua resigned as Mexico’s finance minister on Tuesday, a blow to the government of President Andres Manuel Lopez Obrador, who named a well-regarded deputy minister to replace him.

Urzua, a moderate, said in his resignation letter that the administration made policy decisions without “sufficient foundation,” and that his belief was not shared that economic policies should be based on evidence and free of political motivation.

MARKET REACTION:

* Mexico’s peso declined 2.25% to 19.34 per dollar, its weakest level since May 31. It rebounded in part after Deputy Finance Minister Arturo Herrera was named as Urzua’s replacement.

* The country’s benchmark stock index fell 1.77%, to its lowest closing level since June 3.

ALFONSO ESPARZA, SENIOR MARKET ANALYST, OANDA:

“Investors will be monitoring the situation, with an eye on what Urzua’s resignation means for the financing of large projects that have been promised by the Mexican president.

“The peso has been trading higher on dollar softness, but now political issues have put the Mexican currency on the back foot.”

via NY Times

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza