History is being made in Mexico as Claudia Sheinbaum is set to become the country’s first female president. Sheinbaum is a candidate of Mexico’s ruling party, Movimiento Regeneración Nacional (English: The National Regeneration Movement), also known as Morena. She won the Mexican presidential election with the highest vote percentage margin in Mexican democratic history, racking up between 58.3% and 60.7% of the votes cast.
Other than ensuring the presidency remains within party confines, the Morena party has even more to celebrate. It is on track to secure a two-thirds supermajority in both the chamber of deputies and the senate of the republic and still lay claim to the position of Mayor of Mexico City with Mario Delgado, Morena’s national president, informing supporters of their victory after polls closed.
However, this political lockout has been met with uncertainty in the Mexican markets. People fear that the supermajority in both houses of Congress will allow the ruling party to make constitutional reforms unchecked and reduce the efficacy of the checks and balances that have been put in place to avoid such a situation.
Major players in the cryptocurrency industry, with investments in crypto payment gateways, crypto exchanges, and live Bitcoin casinos, which allow players to wager online using digital currencies, can only wait to see how their investments fare pending the transition into the new government, hoping that things remain largely unchanged.
The Result
The result is that the Mexican peso fell to 17.754 to the US dollar, a seven-week low and a nearly 5% drop, according to the London Stock Exchange Group (LSEG), and its weakest daily of 17.761 to the US dollar, down nearly 4%. There was an unexpected change in fortune for the peso as it was one of the markets strengthening against the dollar at the start of the year but has since weakened by 4%.
Since the news about the election broke, the MSCI index dropped by 8%, the iShares MSCI Mexico ETF closed nearly 111% down, and Mexico’s benchmark stock market index dropped by about 6%.
Alberto Ramos, head of Latin America Economics Research at Goldman Sachs and former Senior Economist at the International Monetary Fund (IMF), had this to say in a client address: “The main challenge for president-elect Claudia Sheinbaum will be to bolster market sentiment and provide a predictable and investment-friendly policy and regulatory framework. Ultimately, the new administration will be challenged not to encroach on private sector activity and free markets, and to avoid further erosion of institutional quality.”
The Crypto Bloom in Mexico: Cut Short?
Of the different investment opportunities being introduced into the Mexican market to aid the development of its economy, cryptocurrency has very recently been positioned to play an important role. A 2022 Global survey showed that Mexico had a 15% adoption rate, and two out of twelve respondents had, at one point or another, held cryptocurrency, according to Statista.
The above, coupled with the fact that over 3 million Mexicans own and use cryptocurrency for things ranging from everyday purchases to gaming on online casinos or just as a hedge against peso inflation and that nearly 40% of companies in the region are looking to incorporate blockchain technology and cryptocurrency into their offerings, show how cryptocurrency has come to be accepted in the region.
Because of this immense growth in relatively little time, invested parties like Bitso, Mexico’s largest cryptocurrency exchange, can only hope that the fears of constitutional reforms in the industry are premature and rumors at best. They are hoping that the soon-to-be president, Claudia Sheinbaum, will keep the nation’s stance towards cryptocurrency the same, positive and unchanged, as she settles into the philosophies of her predecessor and current President, Andrés Manuel López Obrador, seeing as they are both members of the same party. But, like everything in politics, you never know.
