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LatinNews Daily - 03 July 2018

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In brief: Mexico

*Moody’s Investors Service, the international credit ratings agency, has stated that Mexico’s financial volatility and oil sector risks are likely to increase following the victory of Andrés Manuel López Obrador in the 1 July presidential election. In a press release, Moody’s emphasised the likelihood of volatility in Mexico’s financial markets with negative consequences for exchange rates and market yields due to uncertainty about policy direction following López Obrador’s election and, in the short term, the possible influence of the outgoing administration on Mexico’s fiscal outlook. Uncertainty is greater due to Mexico’s long political transition period which means that López Obrador will be inaugurated on 1 December. The vulnerability of the oil sector is related to the stated policies of the president-elect which include plans for reducing or freezing oil prices and reviewing exploration and production contracts signed after Mexico’s 2013 energy sector reform. Nonetheless, Jaime Reusche, Moody’s vice president and senior analyst, announced in an audio conference that, at least in the short term, the agency will not downgrade Mexico’s sovereign credit rating which currently stands at ‘A3’.