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Sheinbaum Picks Ebrard as Economy Chief, Sparking Peso Rally
(Bloomberg) -- Mexico President-elect Claudia Sheinbaum named former Foreign Minister Marcelo Ebrard to lead the country’s economy ministry, a move that relieved pressure on the peso as traders welcomed a selection seen as more market-friendly than potential alternatives.
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Ebrard is considered a more moderate Morena member whose experience dealing with Donald Trump during the start of outgoing President Andres Manuel Lopez Obrador’s presidency could benefit Sheinbaum, especially if the presumptive Republican nominee wins the US election later this year.
“It’s not a dramatic change — but somehow refreshing and an opportunity to show fiscal commitment,” said Alejandro Cuadrado, head of global FX and Latin America strategy 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 element of this administration.”
Mexico’s currency has weakened sharply since Sheinbaum’s win on fears that Lopez Obrador and the Morena party will push forward with controversial reforms, including an overhaul of the country’s judicial system. Investors have also expressed concern that she might stack her cabinet with ideological loyalists of the current leader who would push a similarly interventionist economic agenda.
But the peso rose as much as 0.9% against the US dollar in the wake of the announcement, leading global gains.
Sheinbaum also tapped Juan Ramon de la Fuente, who recently served as Mexico’s ambassador to the United Nations, to serve as foreign minister. The pair were among six cabinet selections the incoming leader announced during an event in Mexico City on Thursday — many of the new advisers have clear technical expertise and worked closely with her campaign ahead of her June 2 election victory.
Sheinbaum will be sworn in Oct. 1 to replace AMLO, as her mentor and partymate is known. While her victory was expected, the governing coalition also won most state gubernatorial races and a majority in congress, giving it undeniable control over the country’s direction.
Ebrard, who also previously served as Mexico City’s mayor, competed with Sheinbaum last year to become the Morena party’s candidate. After initially distancing himself from Sheinbaum, he joined her campaign.
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“Ebrard is seen as more moderate than AMLO and with a more friendly tone toward the private sector. He also has a lot of experience dealing with the US, which is also very important.”
-Felipe Hernandez, Latin America economist
During his time as foreign minister, he oversaw a close relationship with the US through Trump’s presidency and part of Joe Biden’s time in the White House, and worked to obtain vaccines from overseas during the pandemic.
“That is a good name,” said Marco Oviedo, a strategist at XP Inc. “Ebrard started the discussions with the Trump team at the beginning of the administration of AMLO, so can definitely deal with him.”
De la Fuente, meanwhile, coordinated a series of discussion forums organized by Sheinbaum’s campaign in the lead-up to the election. He was once Mexico’s health minister, worked on the UN’s AIDS program starting in the 1990s and helmed the United Nations University Council, plus aided its development programs in Latin America.
Prior to Thursday’s announcement, Sheinbaum confirmed that Finance Minister Rogelio Ramirez de la O will be staying in his role. She kept one other official from Lopez Obrador’s current government, tapping current Foreign Affairs chief Alicia Barcena to lead the environment ministry.
Sheinbaum pledged to name six new members of her cabinet next Thursday, with investors awaiting news about the energy and interior ministries, as well as state energy companies. But after weeks of turbulence, they largely welcomed the early signs.
“Something that strikes me is how it seems to be more of a ‘Sheinbaum cabinet’ and not an AMLO one. The technical capabilities of her team are there,” said Rodolfo Ramos, a strategist at Bradesco BBI. “Ebrard has shown to be an effective operator and his pragmatism should be well-received by investors.”
Sheinbaum’s other appointments were:
Rosaura Ruiz, a biologist and former minister in Mexico City, as science, humanities, technology and innovation minister
Julio Berdegue, Latin America representative at the UN’s Food and Agriculture Organization, as agricultural minister
Ernestina Godoy, who until recently was the attorney general of Mexico City, as judicial adviser
--With assistance from Vinícius Andrade, Cyntia Barrera Diaz and Jose Orozco.
(Updates peso move, adds analysis and context throughout.)
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