Investing.com — The Mexican peso was under pressure as it neared a recent peak of 18.60 in overnight trading in Asia. The move comes after Mexico’s newly elected President Claudia Sheinbaum announced that judicial reform would be an early topic for the new Congress in September.
The peso has already weakened by 8% on concerns that the Morena party, which performed strongly in recent elections, could implement constitutional reforms that could have a negative impact on the market. This potential agenda is expected to be viewed unfavorably by North American investors, potentially leading to a further decline in the value of the peso when markets there open today.
Analysts at ING have long been optimistic about the peso, but say they will now remain cautious.
The analysts also said the highly popular long carry trade could face further challenges next Friday when the Bank of Japan meets to set policy. No interest rate change is expected, but officials could provide some clues about the timing of the tightening, which could see the BoJ’s monthly purchases of Japanese government bonds cut from JPY6 trillion to JPY5.5 trillion or even JPY5.0 trillion. This could help the yen.
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