Sheinbaum Picks Ebrard as Economy Chief, Sparking Peso Rally

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(Bloomberg) — Mexican President-elect Claudia Sheinbaum appointed former Foreign Minister Marcelo Ebrard to lead the country's economy ministry, a move that eased pressure on the peso as traders welcomed a choice seen as more market-friendly than potential alternatives.

Ebrard is considered a more moderate member of the Morena party, and his experience dealing with Donald Trump during the beginning of the presidency of outgoing President Andrés Manuel López Obrador Sheinbaum may be useful, especially if the presumptive Republican nominee wins the US elections later this year.

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“It's not a radical change — but it's somewhat refreshing and an opportunity to show financial commitment,” said Alejandro Cuadrado, head of global FX strategy and Latin America at Banco Bilbao Vizcaya Argentaria SA in New York. “He was involved in the USMCA and the US relationship will remain the most important economic component of this administration.”

The Mexican currency has fallen sharply since Sheinbaum's victory amid concerns that Lopez Obrador and the Morena party will press ahead with controversial reforms, including overhauling the country's judicial system. Investors have also expressed concern that she might fill her cabinet with ideological loyalists to the current leader who might push a similarly interventionist economic agenda.

But the peso rose as much as 0.9% against the US dollar following the announcement, leading global gains.

Sheinbaum also appointed Juan Ramon de la Fuente, who most recently served as Mexico's ambassador to the United Nations, to serve as foreign minister. The pair were among six cabinet picks announced by the new leader during an event in Mexico City on Thursday – several of the new advisers have clear technical experience and worked closely with her campaign before she won the election on June 2.

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Sheinbaum will be sworn in on October 1 to replace AMLO, as her mentor and party colleague is known. Although her victory was expected, the ruling coalition also won most gubernatorial races and a majority in Congress, giving it undeniable control over the direction of the country.

Ebrard, who also previously served as mayor of Mexico City, competed with Sheinbaum last year to become the Morena Party's candidate. After initially distancing himself from Sheinbaum, he joined her campaign.

What Bloomberg Economics says

“Ebrard is seen as more moderate than AMLO and has a friendlier tone towards the private sector. He also has a lot of experience in dealing with the United States, which is also very important.

– Felipe Hernandez, Latin American economist

During his time as Secretary of State, he oversaw a close relationship with the United States during Trump's presidency and part of Joe Biden's time in the White House, and worked to obtain vaccines from abroad during the pandemic.

“That's a good name,” said Marco Oviedo, a strategist at XP Inc. “Ebrard started discussions with the Trump team at the beginning of the AMLO administration, so he can definitely handle it.”

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Meanwhile, de la Fuente coordinated a series of discussion forums organized by Sheinbaum's campaign in the run-up to the election. He was previously Mexico's Minister of Health, worked for the United Nations AIDS program starting in the 1990s, and chaired the Council of the United Nations University, in addition to assisting development programs in Latin America.

Before Thursday's announcement, Sheinbaum confirmed that Finance Minister Rogelio Ramirez de la O would remain in his position. It retained another official from López Obrador's current government, and appointed current Foreign Affairs Chief Alicia Bárcena to lead the Environment Ministry.

Sheinbaum pledged to appoint six new members to her government next Thursday, while investors await news about the Ministries of Energy and Interior, as well as government energy companies. But after weeks of turmoil, they largely welcomed the early signs.

“The thing that amazes me is how it looks like a ‘Sheinbaum government’ and not an AMLO government. The technical capabilities of her team are there,” said Rodolfo Ramos, a strategist at Bradesco BBI. “Ebrard has proven to be an effective operator and his practical approaches should be well received by Investors.”

Sheinbaum's other appointments were:

• Rosaura Ruiz, biologist and former Mexico City Minister of Science, Humanities, Technology and Innovation
• Julio Berdejo, Latin American Representative to the Food and Agriculture Organization of the United Nations, Minister of Agriculture
• Ernestina Godoy, who was until recently Mexico City's public prosecutor, as judicial counsel

-With assistance from Vinicius Andrade, Cynthia Barrera Diaz and José Orozco.

(He updates peso movement, adding analysis and context all the time.)

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