The Mexican peso will weaken against the dollar next month if presidential candidate Andres Manuel Lopez Obrador's leftist Morena party wins a state election seen as key to his chances of victory in a 2018 national vote, a Reuters poll showed Friday.
Fourteen of 16 analysts polled saw the peso depreciating if Lopez Obrador's candidate wins the June 4 gubernatorial election in the State of Mexico. The ruling Institutional Revolutionary Party (PRI) has never lost a race in the populous state, but faces rising anger about corruption and violence. The election is widely seen as an indicator of Lopez Obrador's chances in next year's presidential election. A finalist in the last two presidential elections, the former Mexico City mayor has proposed nationalist policies and said he would review some of President Enrique Pena Nieto's pro-market economic reforms.
Six of the analysts forecast a 3-5 percent depreciation to nearly 20 pesos per dollar from current levels in the case of a triumph by the National Regeneration Movement's (Morena) Delfina Gomez, who has a slight lead in the closely-watched race in the state that encompasses part of the Mexico City area. The peso has been volatile since US President Donald Trump began his election campaign, going from being one of the world's worst performing currencies last year to one of the best in 2017.
Pena Nieto governed the State of Mexico before becoming president. His approval ratings have now slipped. A cousin of the president, the PRI candidate for the June 4 election is the son and grandson of previous State of Mexico governors. Four respondents forecast a more than 5 percent slide in the peso if Gomez wins. Four more forecast a more moderate weakening of 1-3 percent. Two analysts said the peso would not likely be affected.
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