...I remember the Mexican peso crisis during 1994 (I was there); the Mexican peso (or, NP): I can't ever recall (in my lifetime) it doing well against the US dollar? Ever.
It fluctuates very slightly, but just keeps devaluating against the US dollar...
Has anyone got the Peso-to-US dollar price graphs for the last 50 years to compare?
Cheers,
Silver-
I don't see that at all. The last 13 years have been some of the best. I don't have charts for the last fifty years but I do have the last five. If you look at the peso vs dollar it has remained relatively stable.
Now look at the dollar vs euro. It's in the pits to only recently regain some ground.
Inflation by country is hovering around 5% to 6.5%. Mexico is in the middle. Interest rates on savings; Mexico is currently at a low of 7% and the U.S. a whopping 4.5% but that is on a 15 month CD. So who's ahead of the game?
I'm not defending Mexico but as I said earlier, if the U.S. had casa de cambios and sold Euros in the banks could you imagine the panic? I don't get paid in dollars and I have seen no ill effects over the last 13 years, in fact, they couldn't be better. And after giving a personal finance course to 100 employees who earn an average of 1000 to 1500 dollars a month they too couldn't be happier and I now have a much more optimistic outlook of the Mexican economy.
The Fed (Mexico) is auctioning off 400Million dollars a day for the next couple of days as well as the 2.5 billion they sold off today. Mexico has 62 billion in dollaR reserves. Today alone, the peso went back down to close at 12.5 from a high of almost 14.
JMHO
* This post was
edited 10/08/08 05:35pm by qtla9111 *
Those graphs represent a little over 4 years. If you do a best-fit line through the NP graph and back it out some by looking at the last 10-years, you'll note that the NP has done pretty miserably against the USD. It looks far worse when looking at the last 20-years, and even worse looking at the last 40.
If you consider that the USD is the benchmark and the NP is dropping against the failing USD rather rapidly (albeit very recently), it really doesn't look good for the NP (NP = New Peso).
I remember playing the inflation game when I was in Mexico: converting only small amounts of USD into NPs, never holding too many NPs. You have to watch the local prices of commodities that you're regularly buying in Mexico...as a bench-mark of inflation (basket of goods, if you will), and play with your conversion timing to "beat the drop"
The devaluation/inflation rates of Central American currencies was even worse! Every week there was massive currency devaluation, and the timing game was even more crucial! All the locals were buying US dollars the second they had enough to spare after living expanses, to hedge against total financial disaster.
I still have a handful of the old one peso coins from the early 1960's, acquired in Mazatlan as a young sailor. I believe that the exchange rate then was about 8.5 to the US dollar. The Ex and I were in Cancun in Jan. 1987, not too long after the switch to the NP, there were still old bills around that you had to drop the two zeros from. The exchange then was about 3.5 NP I think.
Stan & Linda
Loki & Hobo
06 Dodge 3500 CTD 6 sp Quad Cab Bighorn
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"The Chief Warrent Officer was unimpressed by everything and seldom spoke except to express irritation."Joseph Heller,Catch 22
You can overlay the charts from the last year for the dollar vs the euro and the peso vs the dollar. They are almost identical. The dollar is now at a five year low.
I believe you can look again and see that the dollar to Euro and dollar to Pound sterling has improved significantly over last year this time.
The current Euro rate is 1 Euro = 1 : 1.34, which is significantly improved for the 1:1.56 earlier this summer. Pound sterling is now 1:1.76, which is down from about 2:05 earlier this summer. There has been a major flight to the US dollar in the current situation. Every major nation's currency, except Japan's, has dropped in relation to the USD.
The horrible situation in 1994 was the result of the decision of Salina Gotari's decision to support the value of the peso until he left office when he should have allowed it to float. Zedilla announced that it would be allowed to float and fell by 50% overnight, but not until $USD41,000,000 fled the country. They literally hauled suitcases of cash across the bridge at Hidalgo to the banks in McAllen to preserve value.
I think the downturn this time will not be quite so bad. It really depends on how world wide the downturn is. Mexico is now a major exporter of manufactured goods and will not be able to do anything but respond to downturns in demand, when they come. I really doubt they will lose 50% of value, although today's rate of 13.227, has already produced a drop in value of about 25% already.
My 2 pesos worth.
Wm. W. Thompson, PhD
Professor of Marketing
UT-Pan American
Edinburg, TX
Congratulations to both of you because you gave a clear and understanding point of view on the real economic situation in Mexico.
Your posts are based on real facts and real information, and are not a bunch of biased opinions.
moisheh wrote: Mexicans are the worst businessmen in he world.
Let me tell you Moisheh; I am a proud Mexican and I am also a proud businessmen, and maybe I am not the best businessmen in the world, but I can tell you that you are in no way, better than me.
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You should not take my comments so personally. I do stand by the comment on the businesses being bled dry. I never stated I was better than anyone. I really dont think this is the proper forum for further discussions on this subject but if you want to send me a PM I would gladly continue .
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