Mexican Senate passes proposal to block challenges to constitutional reforms

Mexico's Senate on Friday passed a proposal which would make reforms to the Constitution "unchallengeable" as ruling party Morena and allies push through a swath of constitutional reforms, including a controversial judicial overhaul.

WHY IT'S IMPORTANT

In September, Congress passed a judicial reform calling for all judges and magistrates to be elected by popular vote. Ruling lawmakers have argued it will stamp out corruption in the judiciary, but the uncertainty has frightened investors and caused the local peso currency to slump.

Mexico's Supreme Court had accepted a challenge to the reform earlier this month.

MARKET REACTION

"The probability of cuts (to Mexico's sovereign credit rating) is increasing due to the deterioration of Mexico's institutional profile," Banco Base said in a note to clients, citing the Senate's passing of the reform.

The peso had weakened around 0.40% against the greenback in mid-morning trading on Friday. Analysts at brokerage Monex attributed the slide to "local political noise" and the upcoming U.S. presidential elections.

WHAT'S NEXT

The proposal now goes to Mexico's lower house, where the ruling bloc also has a wide majority.