The bogeyman of Mexico

IN RECENT months the fluctuation of the Mexican peso against the dollar has resembled an electrocardiogram during a panic attack. The currency fell some 15% after the victory of Donald Trump, who promised to scrap the North American Free-Trade Agreement (NAFTA) linking Mexico, the United States and Canada. The peso has since recovered, on mounting hopes that Mr Trump’s administration will recognise the mutual benefit in NAFTA. But there is another nightmare troubling the currency markets: the notion that Andrés Manuel López Obrador, a left-wing populist who in some ways resembles Mr Trump, will win a presidential election a year from now.

After wobbling in May when polls suggested that Mr López Obrador’s candidate might win the governorship of the State of Mexico, the biggest of four states to hold elections on June 4th, the peso gained 2.5% when preliminary results signalled a narrow victory for the ruling Institutional Revolutionary Party (PRI) of President Enrique Peña Nieto....