(Bloomberg) -- Mexico’s president-elect was set to inherit the world’s top performing currency. Instead she’s confronting a historic slump in the peso that’s casting a pall over her early days in leadership.

Claudia Sheinbaum struggled to address investor concerns Tuesday that the ruling party’s landslide election win will pave the way for measures to erode the judicial branch’s independence and allow a slate of constitutional changes to be pushed through quickly. Speaking at a news conference, she said the economy was stable and touted Mexico’s trade relationship with the US, even as the peso extended a drop. 

“Investors don’t have any reason to worry,” she said. “But at the same time, there’s an agenda for the people of Mexico and a project for the nation that have to continue.”

It was the second time Sheinbaum spoke to press this week, with another address scheduled for Wednesday, seemingly taking a page from her predecessor, President Andres Manuel Lopez Obrador. Almost every weekday since taking office in 2018, AMLO has gathered journalists for an hours-long conference in Mexico City — something he has continued to do after the election of his protege.

While Lopez Obrador often used the conferences to effectively set the agenda for local media, Sheinbaum has so far had a much harder time controlling the narrative. The attempts to diminish concerns about her plans have fallen flat with investors too. The currency, which slid both times as she spoke, is now down more than 10% since the June 2 vote, by far the world’s worst performer in that span. 

The president-elect is in a jam, caught between expectations for change after her party’s electoral triumph and investors and business executives who worry the country will squander a valuable opportunity to boost growth amid a manufacturing boom driven by nearshoring. 

Neither the finance ministry or the central bank have made any comments around the peso’s slide, and have refrained from stepping in to prop it up. Last week, Finance Minister Rogelio Ramirez de la O held a conference call to calm nerves that was plagued by technical difficulties and limited by his refusal to take questions.

Investors want to see a clear distancing from the proposals put forth by Lopez Obrador, who endorsed Sheinbaum’s candidacy and whose term ends Oct. 1. Instead, she has pledged to hold surveys and foster dialogue about his plan to replace the Supreme Court with elected officials, but never disavowed it. 

Lopez Obrador has said the change is needed because the judiciary is corrupt, and he wants the measure passed in September, when new lawmakers take their seats but before he hands over power.

“Claudia feels indebted to AMLO and needs to show him something for it,” said Aaron Gifford, an emerging market strategist at T. Rowe Price in Baltimore. “Investors want to hear about how Claudia will hold the line against the reforms and make sure that nothing controversial or radical will get through. I just don’t buy it.” 

The peso had been the best performing currency in the world during Lopez Obrador’s six-year term as Latin America’s second-biggest economy stood out as a bastion of political and fiscal stability. While his populist rhetoric and demonization of the wealthy was often uncomfortable for investors, his policies were moderate. 

Opinion surveys had shown Sheinbaum cruising to victory, but overnight, with the ruling party coalition snagging almost two-thirds of congressional seats in the vote, complacent investors awoke to the risks of an all-powerful party that could change the constitution.

As a result, the currency has slid against the dollar in almost every session since the June 2 vote. It lost another 2% on Wednesday, by far the worst performer in emerging markets. 

The fear is that the election of judges would allow Morena, the party founded by Lopez Obrador, to stack the courts with loyalists. But Sheinbaum’s decision to call for everyone from court workers to academics to weigh in on the process was a hint to some that there was still room for modifications, even if the meat of the bill might remain unchanged.

Rodrigo Villegas, founder of the political risk consultancy Suass Group in Mexico City, said the lawmakers aligned with Morena don’t all hold the same views and may not all be keen on Sheinbaum’s leadership. But Sheinbaum is confronting a delicate situation in which she’s trying to appease her predecessor and assert her authority without sparking a crisis.

She has only “a narrow margin to maneuver,” Villegas said. “She will have to make delicate or cautious steps moving forward without breaking with Lopez Obrador or hardliners.”

Businesses in the energy, infrastructure and transportation sectors are most worried about the judicial proposal and other reforms pushed by Lopez Obrador, according to Luis de la Calle, a consultant and former undersecretary of international trade negotiations in Mexico’s Economy Ministry.

Mexican assets had blithely ignored the risks in the run-up to the election as investors expected Sheinbaum to maintain the status quo, and potentially make efforts to improve relations with the business community and address the $102 billion debt of state-owned oil firm Petroleos Mexicanos.

Shamaila Khan, UBS Asset Management’s head of emerging markets, said Sheinbaum needs to address concerns about excessive debt levels at the state-owned oil company and the need for fiscal reform if she wants to change the narrative. The approval of the judicial reform would raise red flags at credit rating companies and risk putting Mexico on a downward path, she said.

“Investment grade is hard to win, but easy to lose,” said Khan, who had been cautious on Mexico ahead of the election due to the risks of a ruling party supermajority.

Elected judges may turn a deaf ear to complaints from the private sector, undermining the rule of law, so the naming of the cabinet next week will be a key catalyst for the peso, said Benito Berber, chief Latin America economist at Natixis. Investors want to see market-savvy technocrats take key economic posts, including at Pemex, Berber said. 

“AMLO is calling the shots,” Berber said. “Maybe in October she will break free, and the cabinet will hint to that. Or not.”

(Updates with context on press conferences starting in third paragraph)

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