- Andres Manuel Lopez Obrador secured more than half the vote in Mexico’s presidential election.
- The Mexican peso fell more than 1% versus the greenback early Monday.
- Follow the Mexican peso in real time here.
The peso fell early Monday after Mexico handed Andres Manuel Lopez Obrador the presidency in a landslide victory, shifting the country’s government away from establishment politics and to the left for the first time in decades.
The peso was down 1.5% to 20.1568 versus the US dollar at 9:30 a.m. ET after preliminary results from Mexico’s electoral commission showed Lopez Obrador sweeping up more than half the vote.
Lopez Obrador struck a conciliatory tone in an acceptance speech Sunday night, saying he would pursue fiscal discipline and respect the independence of Mexico’s central bank.
But the prospect of Lopez Obrador rattled markets leading up to the election. The former Mexico City mayor, who has held double-digit leads in polling for months, campaigned on increased social spending and opposition to private investment in the country’s energy sector.
“It’s worth cautioning that we still have little clarity on Amlo’s economic policies,” said Edward Glossop, an economist at Capital Economics. “We’ll be looking in the coming weeks for indications of the size and nature of any fiscal stimulus or signs of a more interventionist energy policy.”
Glossop said Lopez Obrador’s win is unlikely to influence monetary policy decisions this month. The Bank of Mexico hiked its main rate last month to 7.75%, the highest its been since 2009.
“Even if the peso falls a bit further as Morena’s majority in Congress is confirmed, that’s unlikely to spring Banxico into action either,” Glossop said.
The election came amid a backdrop of mounting tensions between Mexico and the US, which some analysts say have pushed relations between the two countries to one of the most divisive points in recent times.
After the Trump administration in May slapped hefty steel and aluminium tariffs on its allies, Mexico hit back with $US3 billion worth of retaliatory levies on US goods. And efforts to update the North American Trade Agreement have stalled, raising concerns that negotiations could drag into next year.
President Donald Trump called to congratulate Lopez Obrador after his apparent victory, according to the Associated Press, but it’s unclear how the two leaders will interact in the future. Lopez Obrador has taken hits at Trump, and analysts have warned his win could ratchet up tensions between the US and Mexico.
“While Obrador’s victory may ease concerns of political instability, there still remains a thick smog of uncertainty over Mexico’s economic outlook,” said Lukman Otunuga of FXTM.
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