Mexican Finance Minister Rogelio Ramírez de la O spoke privately with investors on Tuesday in a bid to calm the markets after the local currency and stock market plunged on Monday amid concerns that the ruling political party’s landslide win in Sunday’s elections may usher in constitutional changes.
The Finance Ministry did not provide the details of the minister’s meeting with investors, which some media outlets reported was a call that lasted only two minutes.
But it appears to have helped. The local stock market recovered 3.24% on Tuesday after tumbling by 6.11% on Monday, the worst decline since the start of lockdowns during the pandemic in March 2020.
The peso, however, slipped by another 1.3% to MXN17.86 per dollar on Tuesday from MXN17.63 per dollar on Monday, but that was less than the 3.6% plunge on Monday from MXN17.02 on Friday.
Monday’s plunge came after Claudia Sheinbaum won by a greater-than-expected margin in the election for the ruling left-wing Morena party. This raised concerns among investors that the Morena party, which has run Mexico since 2018, could secure a congressional supermajority that would allow it to pass constitutional changes without checks and balances from opposition lawmakers.
The task of calming the markets appears to have fallen on Ramírez de la O, who has accepted to remain in the post under Sheinbaum.
In a press release on Tuesday, Ramírez de la O said he will share with investors, international organizations and credit rating agencies that the next administration will remain steadfast in its priorities of macroeconomic stability, fiscal prudence, financial discipline, central bank autonomy and the rule of law. The next administration will also seek to drum up fresh investment from local and international companies.
The minister said he will seek to reduce the national debt to 3% of GDP by 2025 and strengthen the government’s ties with Pemex, one of the most indebted oil companies in the world.
[PHOTO: Mexican Finance Minister Rogelio Ramírez de la O meets with President-elect Claudia Sheinbaum a day after Sunday’s election. Source: Sheinbaum’s X feed]