The crisis of the Mexican peso worsens after AMLO's judicial reform and labor protests.

The Mexican peso has been plunged into a significant crisis following the recent approval of President Andrés Manuel López Obrador's judicial reform plan. This legislative change, which was backed by a congressional committee, has raised concerns among investors, who believe these reforms threaten the rule of law in Mexico. In the context of this climate of uncertainty, the peso has collapsed, becoming the worst-performing currency globally. AMLO's proposal includes the election of federal judges by popular vote, a change that, according to its supporters, aims to eradicate corruption in the judicial system. However, critics argue that this measure could weaken judicial independence and increase the ruling party's control over the judiciary. This debate has generated negative reactions both nationally and internationally, with U.S. Ambassador Ken Salazar being one of the most vocal in warning that these reforms would represent a "significant risk" to democracy in the country. The unprecedented speed with which the plan was approved at the committee level surprised many analysts. Marco Oviedo, a strategist at XP Investimentos, noted that there was a certain incredulity among traders, who expected a dilution of the proposal before its approval. The possibility of the reform becoming law will be discussed in the Lower House next week and will require a two-thirds majority in both chambers of Congress for approval. The uncertain environment generated by these reforms has led to a decline of more than 13% of the peso against the dollar since the legislative elections in June, where the Morena party achieved a landslide victory. The Mexican currency plummeted 1.4% to 19.67 per dollar, the lowest level in three weeks. This drop has caused many traders to reconsider their bets on the currency, which had previously enjoyed a strong position due to record interest rates, fiscal prudence, and political stability. Erick Martínez Magaña, a strategist at Barclays Plc, expressed concern over the deterioration of institutions in the country. As the end of AMLO's term approaches and that of his successor, Claudia Sheinbaum, begins, the uncertainty could intensify. The final weeks of AMLO's administration coincide with debates in Congress, where any changes could have lasting repercussions for the Mexican economy. Global companies have begun to send warning signals about the risks that judicial reforms pose to investments in Mexico. Morgan Stanley has downgraded its rating on Mexican stocks to "underweight," citing instability caused by the reforms. Citigroup and Goldman Sachs have also closed bullish positions on the peso, considering that there is no short-term catalyst to drive its recovery. Nationwide strikes by judicial workers in protest against the reforms add an additional layer of complexity to the situation. These demonstrations reflect the concerns of sector workers about the implications the reforms have for their independence and for justice in the country. The coming days will be crucial to observe how debates unfold in the new Congress and whether the reforms will ultimately be implemented. This shift in Mexico's judicial policy underscores the fragility of investor confidence in an environment where reforms can significantly alter the balance of power. The peso, which had been considered a safe asset in the global economic landscape, now faces an uncertain future, which could have far-reaching effects on the country's economy. The situation demands ongoing attention and analysis, as decisions made in the coming weeks could not only define the future of the judicial system but also the economic trajectory of Mexico in the global context. The international community is closely watching this development, aware that stability in Mexico is crucial for the region and for trade relations with other countries. The resolution of this conflict will be decisive for investor confidence and the economic well-being of the Mexican people.