MEXICO CITY/NEW YORK (Reuters) – Mexican markets have rallied this month into a likely win by the leftist frontrunner in Mexico’s presidential election on Sunday, but local assets could sell-off if a landslide victory for his party forms a congressional majority.
Ahead of the July 1 vote, Mexico’s peso MXN= firmed to its strongest since late May in early trading Friday before reversing direction and sinking around 1 percent. Stocks .MXX rose to their highest in more than eight weeks.
Andres Manuel Lopez Obrador, a fierce critic of the ruling elite, held a wide margin in final polls. He would become Mexico’s first left-leaning leader for decades if elected on Sunday.
Analysts said Lopez Obrador’s economic team has been out in force to mollify investor concerns about a possible stark departure from pro-market policies or fiscal discipline. So far, markets are betting on moderate polices in line with Peru’s Ollanta Humala or Brazil’s Luiz Inacio Lula da Silva.
“His discourse has moderated and his economic advisors have been seeking a vote of confidence,” said James Salazar, an analyst at CI Banco.
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