The Peso Plummets After Mexico’s Finance Minister Quits And Calls Out Corruption In AMLO’s Government
Mexico’s peso has taken a hit in value after the country’s finance minister decided to quit his job over disagreements with the president.
The decision by a top adviser to the Mexican president to resign while denouncing conflicts of interest in the government stunned the nation and its financial markets.
After news broke that the finance minister was resigning, the Mexican Peso lost a lot of value.
Finance Minister Carlos Urzua’s abrupt decision to quit on Tuesday was the first major cabinet loss since Andres Manuel Lopez Obrador took office in December. The scorching tone of his resignation letter, from a public official known for extreme politeness and addressed to a president who made fighting corruption his central campaign issue, made the departure all the more surprising.
The unexpected departure of Carlos Urzua seven months into Lopez Obrador’s presidency sent stocks and the peso plunging and renewed worries among investors still wary after the president’s cancellation of a $13-billion airport project that was underway outside Mexico City.
In his resignation letter, Urzua called out corruption and conflicts of interest inside the government.
“I’m convinced economic policy should be based on evidence, considering the various effects it may have and free from all extremism, whether from the right or left,” Urzua wrote in the letter posted on his Twitter account, adding that decisions by Lopez Obrador’s government on matters of public administration have lacked foundation. “However, during my term, these convictions weren’t shared.”
His tweet already has more than 25,000 retweets and nearly 7,000 comments.
By midday, the peso had fallen over 2% against the US dollar – a major slide for a currency considered to be quite healthy.
Within an hour, AMLO, as the leftist leader is known, nominated Arturo Herrera, Urzua’s deputy, to replace him. That helped to limit a tumble in the peso, which fell 1.2% at 3:23 pm local time, stopping losses of as much as 2.3% that had followed the publication of Urzua’s letter. The nation’s main stock index fell as much as 2%.
Markets are worried because according to many sources, Urzua was seen as the most responsible official at the finance ministry.
Many have admitted that it was not a secret that there were disagreements within AMLO’s government over economic policy.
Urzua had publicly opposed a law proposed by Lopez Obrador’s Morena party to reduce bank fees. He also opposed a proposal that the government dip into central bank reserves to fund infrastructure plans.
Some bickering is to be expected with any government, according to Coutiño, “there should be a consensus in terms of what the administration wants to do in the country.”
And the news simply shocked many, since Urzua had been one of AMLO’s most vocal allies and supporters.
Urzua has been a long-standing ally of Lopez Obrador, having been his finance secretary when AMLO was mayor of Mexico City at the start of the last decade. Herrera is also a former finance minister of AMLO’s in the nation’s capital.