The calm that’s settled over Mexico trading is at risk of getting upended.
With White House officials saying they’re confident a trade deal can be reached to benefit both Mexico and the U.S., the peso has regained more than half of the losses it saw after Donald Trump’s victory pushed it to record lows. Talks aren’t expected until late this year, allowing investors to turn their attention to the next big risk for the Latin American country: a presidential win by opposition candidate Andres Manuel Lopez Obrador, known as Amlo.
Early polls show him in the lead or second place, but investors see a more reliable test of his prospects coming in June elections for the governorship of the State of Mexico, where his Morena party is vying to oust President Enrique Pena Nieto’s PRI for the first time ever. A win for Morena would be a wake-up call for investors who have become too complacent and could send the peso tumbling 10 percent, according to Nomura Holdings Inc.