USD/MXN Climbs After Airport Project for Mexico City is Scrapped
- President elect Lopez Obrador cancelled plans for the $13.3 billion project that was already one third complete
- The cancellation will reportedly cost $5 billion but favor a less-ambitious renovation project to an already existing airport
- The Peso fell 3.80% on the news while the Mexican equity market shed 4.20%
- Read more about the cancellation in Spanish here.
Mexican President elect Andres Manuel Lopez Obrador, commonly referred to as AMLO, announced his decision to cancel the construction of the New Mexico City International Airport (NAIM) on Monday. The decision came after four days of public consultation in which citizens voted in favor of the President elect’s proposal to cancel the project and instead renovate an existing airport.
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The decision to cancel construction has rattled many of Mexico’s business leaders and drawn harsh criticism from others. Juan Pablo Castanon, President of Mexico’s leading business chamber said the decision “sends a message of uncertainty to international markets, investors and all the citizens.”
USD/MXN Price Chart 10-Minute, October 26th – October 29th
However, international markets were quite certain of one thing Monday as the peso traded decidedly lower. The USD/MXN pair climbed 3.46% to 20.0555 and notably crossed 20, an important psychological level.
S&P/BVM IPC Price Chart 10-Minute, October 29th
Similarly, the Mexican index S&P/BVM IPC shed 4.20% as investors expressed concern over the incoming administration’s attitude toward business and subsequently cut exposure.
--Written by Peter Hanks, Junior Analyst for DailyFX.com
Contact and follow Peter on Twitter @PeterHanksFX
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