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Chris Turner, global head of strategy at ING, points out that yesterday’s surprise resignation of Mexican Finance Minister Carlos Urzua has hit the Mexican peso, although losses were curtailed after his market friendly Deputy, Arturo Herrera, was appointed as a replacement.

Key Quotes

“The reasons for Urzua’s departure, such as questionable policy decisions and the ‘imposition of officials that have no knowledge of public finance’ will raise questions over Mexico’s fiscal credibility – especially at a time when investors are examining the prospects for state support of Pemex.”

“A credible Banxico and very high implied yields (8%+) have seen locals and foreigners enamoured with MXN exposure, although a fiscal risk premia could now take the shine off the MXN. (Expect to hear more on the Pemex story later this year).”