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Mexico’s currency bill: Risk of Amlo’s strain of populism remains

The congressional debate on Mexico's controversial proposed currency bill has been postponed, but opponents, including the country's central bank, should not celebrate too soon.

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In the face of concerted and coordinated criticism, the Mexican government has pulled its proposed currency bill from Congress. But it may not be for long.

The decision, which came on December 15, saw the peso restart its climb against the dollar as investors reacted to the halt of an alarmingly bad piece of legislation.

However, despite the postponement of its debate, the bill remains on the official agenda for 2021.

If passed, the bill would infringe on the central bank’s independence, as well as damage the stability of the financial system. Little wonder, then, that the opposition has been so vehement.

Investors should remain cautious – we have been here before. This isn’t the first time the administration of Andrés Manuel López Obrador (Amlo) has proposed policy so wrong-headed and unpopular that everyone thought he would have to beat a retreat, only for that consensus to be proved wrong.

Victory in this particular battle shouldn’t be taken as winning the war

It is not so long ago that the accepted opinion was that Amlo would be forced to drop his plans to abandon Mexico City’s new airport terminal.


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