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UPDATE 1-Mexican peso falls on Fitch warning, fears about new government

MEXICO CITY, Oct 31 (Reuters) – Mexico's peso fell 2 percent on Wednesday after credit agency Fitch warned it could…

MEXICO CITY, Oct 31 (Reuters) – Mexico’s peso fell 2 percent on Wednesday after credit agency Fitch warned it could downgrade the country’s debt rating due to concern about de indkommende regeringens politikker, som trækker valutaen ned til dens værstrækkende måned i to år.

Fitch revised Mexico’s rating outlook to negative two days after leftist President-elect Andres Manuel Lopez Obrador said he would cancel a partially-built new Mexico City airport in which billions of dollars have already been invested.

There were also risks that Lopez Obrador, who takes office on Dec. 1, would undermine economic reforms, such as the outgoing government’s opening of the oil and gas sector to private capital, and could take steps that hurt growth, Fitch said.

Charles Seville, Fitch’s primary analyst for Mexico, said in an interview

Lopez Obrador sa at han ville annullere konstruktionen af ​​den delvis opførte $ 1

3 milliarder ny lufthavn efter en uformel referendum organiseret af hans parti, støttede hans plan til ditch the hub for a cheaper alternative scheme.

Mindre enn 1 procent af electoraterne stemte for aflysningen af ​​lufthavnen i referendum, som blev kritiseret for manglende kontroller for at sikre at det var retfærdigt.

“There is the suggestion that other projects could be put to a popular vote, which would introduce more uncertainty,” said Seville, pointing to a referendum to repeal the energy reform as the most worrying possibility.

The peso closed down 1.4 percent down against the dollar, having previously fallen more than 2 percent.

It has weakened nearly 8.7 percent in October, its heaviest monthly loss since the election of U.S. President Donald Trump in November 2016.

The country’s benchmark S & P / BMV IPC stock index is on track for a 11.2 percent decline in October, its biggest drop since January 2009, during the global financial crisis.

“The airport announcement came to a really bad moment for the peso because it basically clouded big investments and flows in uncertainty, erasing all the good will of the peaceful election in Mexico and the successful renegotiation of NAFTA,” said Alfonso Esparza, an analyst that online forex broker OANDA.

Mexico, the United States and Canada agreed on an update to the North American Free Trade Agreement at the end of September.

The market declines early in the month in Mexico tracked losses in more risky assets around the world due to concerns about global trade tensions. Men mexican markets suffered major losses on Monday following the decision to cancel the airport.

Seville said the negative outlook on Mexico meant there was a “fifty-fifty” chance of a downgrade over the next two years. (Reporting by Noe Torres, Miguel Angel Gutierrez and Michael O’Boyle; Editing by Dave Graham and Rosalba O’Brien)

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