Mexican legislators bowed to an outcry from bankers and delayed taking up a bill that critics say could expose the central bank to the risk of money laundering by forcing it to buy dollars that cannot be repatriated.
The bill flew through the Senate on Friday last week and had been the subject of intense lobbying over the weekend.
The lower house of Congress had appeared poised to vote on the bill on Tuesday, despite appeals for discussion from senior figures close to the government, including former leader of the ruling Morena party Alfonso Ramírez Cuéllar, who said “there is no national urgency”.
Laura Rojas, an opposition deputy from the National Action party, tweeted that the bill had been postponed until February.
Investors breathed a sigh of relief that the bill would not be rushed through. The rating agency Moody’s Investors Service warned it would be “credit negative for the sovereign”.
The peso, which had traded at 20.23 to the dollar earlier in the day, recovered to 19.91 after the lower house confirmed the bill had been postponed until the new year.
“There cannot be the slightest doubt that the depreciation it accumulated over the week was largely due to the higher perception of risk,” tweeted Gabriela Siller, head of financial and economic research at Banco Base.
Ricardo Monreal, Morena’s leader in the Senate who drafted the bill, said he was open to further study.
Mr Monreal and Luis Niño de Rivera, head of the Mexican Banking Association, have both stressed that they see it as a “social” reform to help Mexicans returning from the US exchange their dollars easily and at a fair price. But the association’s other members denied that and slammed the bill.
“This solves a problem that doesn’t exist,” said one senior Mexican banker. But he did not consider the bill dead, adding “the danger has not passed.”
Mr Niño de Rivera is head of Banco Azteca, owned by billionaire businessman Ricardo Salinas, a close adviser to President Andrés Manuel López Obrador who has kept out of the fracas. Alejandro Díaz de León, Banxico governor, told lawmakers last week that the legislation would benefit just one bank which has recently had problems exporting dollars, and was “not a generalised problem”.
He did not name the bank but Mr Salinas’s Grupo Azteca banking, retail and media conglomerate has lobbied for the bill’s approval, Emilio Álvarez Icaza, an independent senator, tweeted last week.
Under current rules US dollars received in Mexico are changed into pesos. Any that are not used are repatriated to the US through correspondent banks, which act as intermediaries, or sometimes sent to Canada and Spain.
Banks were left with $102m that they were unable to send abroad during the first nine months of the year, the central bank said. The new law would force Banxico to buy those dollars and add them to its own reserves, affecting both its balance sheet and its autonomy to take measures it considers best to control inflation.
Despite the pause on the Banxico law, deputies approved another controversial bill on Tuesday, requiring foreign agents such as the US Drug Enforcement Administration to hand over all intelligence to Mexico.
Critics have said this bill risked putting bilateral security co-operation back three decades.