Mexican Peso, BMV Fall After Morena’s Election Victory

The Mexican peso and the Mexican Stock Market (BMV) experienced significant declines on Monday following Morena's overwhelming victory in both the presidential and congressional elections. The markets reacted to data indicating that the party, along with its allies, is set to secure a constitutional majority in the Chamber of Deputies and come very close to achieving the same in the Senate.

The Mexican peso dropped by 3.1%, or 0.53 units, trading at MX$17.53 per dollar, according to Bloomberg data at 9:30 AM in Mexico City. Simultaneously, the BMV fell by 3.8%, reaching 53,035 points. Experts attribute the market declines to concerns over the potential for Morena, having a majority, to implement constitutional reforms. The quick count from the National Electoral Institute (INE) suggests that Morena and its allies (PT and PVEM) will hold the constitutional majority in the Chamber of Deputies and be within two to five seats of achieving the same in the Senate.

“The Mexican peso depreciates due to increased risk. About 80% of peso vs dollar transactions are speculative, and the risk-reward balance for investors has shifted with the election result. With a majority in Congress, Morena and allies could amend the constitution,” said Gabriela Siller, Director of Economic Analysis, Grupo Financiero BASE, on her X account.

Sheinbaum won the elections with between 58.3% and 60.7% of the votes, according to a quick count sample by the INE, making her the first female president of the country. She secured a lead of more than 30 points over her closest rival, Xóchitl Gálvez. While her victory was widely anticipated by the markets, the scale of the support projected for her party's coalition in Congress surprised many investors.