BajaNomad - Peso devaluation - what does it mean to me?

Peso devaluation - what does it mean to me?

oxxo - 1-28-2009 at 04:14 PM

I received over 14.1 pesos to the dollar today at the bank. This is great, it makes my dollar go further in Mexico and can live more cheaply here.

But I don't know if this is good for me in the long run. It certainly isn't good for Mexicans! I know it means that more Mexicans will be seeking work in the US both legally and illegally.

For you economists out there, what does it mean to me in the long run as an expatriate? If the peso is devalued by the government say by 50% against the US dollar, what does that mean to me living here full time? I know I don't want to be holding a lot of pesos at any one time. Does it also mean inflation in Mexico?

Something just doesn't feel good to me about the falling peso and I can't put my finger on it. :?:

Thanks for any help.

comitan - 1-28-2009 at 04:29 PM

I personally think it helps me and also the Mexicans, since I did a lot of upgrades that I would not have done otherwise. Made work for 4-6 Mexican workers for the last 3 weeks. We also bought things we would not have without the devaluation.

This is the time buy,buy.

[Edited on 1-28-2009 by comitan]

Bajahowodd - 1-28-2009 at 04:50 PM

That's not the big picture. The bulk of Mexican exports go to the U.S. No one in the states is buying anything. Mexicans, especially in manufacturing are losing their jobs. A weakened peso makes it all the worse for them. Don't know if anyone caught the opening of a Federal soup kitchen the other day in Mexico city. the government has plans for 300 of them.

DENNIS - 1-28-2009 at 06:10 PM

Quote:

Originally posted by oxxo
But I don't know if this is good for me in the long run. It certainly isn't good for Mexicans!

Oh yeah? Why not? It's good for us with dollar income with dollar purchased items by stores before the new inventory hits the shelves but, nothing changes.
There is no devaluation. The peso buys what the peso is worth and imported inventory will reflect the difference as inventory is reestablished.
Nothing will change in the Mexican on-the-street market.
Only in markets pinned to the dollar will there be a signifacant effect but, Mexico is pinned to itself on the streets.
The peso stands by itself and will. The difference is with what comes from without...China and the U.S.

Ask any Mexican who lives as Mexicans have done forever, without imports, and you will realize the only thing that has changed will be attributed to inflation....not dollar/peso differences.

thebajarunner - 1-28-2009 at 06:27 PM

Not sure that I understand the logic in some of these responses.

Short term, it helps everyone dealing with dollars and locals will be fairly static, except for those without work, and this devaluation will not be a primary cause of job loss.

Long term, it hurts the locals, real bad, because prices will adjust, and quite quickly back to close to the dollar value, while the locals wages will take much much longer to catch up.

The weakened peso should make a positive impact on exports, but, if no one is buying, then I guess that one will not be much of a benefit, no matter what the prices. One of the main exports is oil, and all the oil exporters got so spoiled by the recent price runup that this market is totally out of whack.

Bottom line, short term you dollar guys win, long term you will be right back where it started, and the locals will suffer.
(Hasn't this always been the bottom line in Mexico?)

Don Alley - 1-28-2009 at 06:30 PM

While I get more pesos per dollar at the ATM, they don't necessarily go as far. High end stuff here is priced in dollars, and imports are often still sky high in price. There are some lingering values but I fear that time will show that the peso is weakening against goods and commodities as well as currencies.

So regardless of the exchange rate, you get what you pay for.

tjBill - 1-28-2009 at 06:36 PM

In Tijuana many people pay their rent in dollars. So if someone is earning income pesos their rent has gone up by 30%.

Udo - 1-28-2009 at 06:36 PM

Quote:

The peso stands by itself and will. The difference is with what comes from without...China and the U.S.

Last week I needed some additional Mexican clay dishes and I went to a local Mexican grocery chain (Card##as) in San Bernardino CA. to purchase some more. I picked up some nice and rustic ones. However, when I got home I noticed that there was a label on the bottom of the dishes that the country of origin for the product was China. I never would have thought that China could manufacture and ship such dishes for less than Mexico itself could. It won't be long before the Mexicans themselves can not afford to purchase products made in their own country...kinda like the boat that US citizens are in now. :lol:

DENNIS - 1-28-2009 at 06:46 PM

Quote:

Originally posted by tjBill
In Tijuana many people pay their rent in dollars. So if someone is earning income pesos their rent has gone up by 30%.

That's a problem they designed. There should be an agency which would cut off the balls of a landlord who would violate the law that states they can't do that but, makes it prerequisite to a rental.

tjBill - 1-28-2009 at 06:48 PM

Quote:

Originally posted by udowinkler

However, when I got home I noticed that there was a label on the bottom of the dishes that the country of origin for the product was China. I never would have thought that China could manufacture and ship such dishes for less than Mexico itself could.

Local papers have reported that Virgin of Guadalupe statues made in China are being discovered. To the outrage of Mexican nationals.

DENNIS - 1-28-2009 at 06:54 PM

Quote:

Originally posted by tjBill
Local papers have reported that Virgin of Guadalupe statues made in China are being discovered. To the outrage of Mexican nationals.

Gee....I hope it's not the folks that sell piñatas that look like Mickey Mouse and Donald Duck.
Oh...but, that would be OK since they're Mexicans and anything they want to do is alright.

Woooosh - 1-29-2009 at 11:53 AM

I think it only means you will get a lot more bang for your buck- while the 14:1 lasts... If you earn pesos- you're in for trouble though because inflation will soar to match that level it soon. A always- the losers wil me the poor mexicans who have no options.

You can pay your water bill a year in advance in pesos and save 40%- Every year they send us a yearly estimatied total with a 10% discount if we pay up frnt. Now is the time.

BajaGringo - 1-29-2009 at 11:59 AM

10% or 40%???

:?:

BajaGringo - 1-29-2009 at 12:00 PM

Or are you referring to the combination of discount and exchange rate? Should have thought a minute before responding...
:rolleyes:

Priorities

Dave - 1-29-2009 at 12:09 PM

Quote:

Originally posted by tjBill
Local papers have reported that Virgin of Guadalupe statues made in China are being discovered. To the outrage of Mexican nationals.

What with all the corruption, drugs and killings I'm glad Mexicans have found their sense of outrage. :rolleyes:

Bajahowodd - 1-29-2009 at 12:15 PM

China has an an advantage for quite some time, inasmuch as they don't have to worry much about labor laws, safety laws, or for that matter, how much they pay their people. There actually has been a discernable shift of manufacturing jobs from Mexico to China in the past several years. What I foresee, is that a sustained economic slump will have the effect of all boats lowering with a receding tide. That being said, tough economic times could spark protectionist ideas in some countries and reverse much of the free trade phenomenon.

Woooosh - 1-29-2009 at 12:15 PM

Quote:

Originally posted by BajaGringo
10% or 40%???

:?:

The CESPT gives you a 10% break when you pay in advnace and the peso is down 40%.

BajaGringo - 1-29-2009 at 12:28 PM

Yeah, when I actually let a few brain cells light up a couple of neurons I figured that one out...

:rolleyes: