BajaNomad - peso vs dollar

peso vs dollar

absinvestor - 4-30-2011 at 08:57 AM

When we were vacationing in Baja Sur last year we usually asked the vendor for the price in dollars and in pesos. In most instances it seemed the vendor preferred dollars ie they would give more pesos per $ than the bank exchange rate. I notice now that the dollar vs peso exchange rate has fallen about 5% since our last visit. In general, are you seeing a vendor preference for dollars or pesos or does it not seem to make a difference?

woody with a view - 4-30-2011 at 09:14 AM

to me it doesn't matter. anything over 10-1 is just the price of going to baja. trying to save a nickel on a dollar doesn't make much sense for them or me, in my opinion.

Bob and Susan - 4-30-2011 at 09:14 AM

friday i got 11.32 at the bank in mulege

most vendors in mexico perfer pesos ALWAYS
but
every business will take dollars

DENNIS - 4-30-2011 at 10:02 AM

It's been my observation that the reason they won't give even near a true conversion rate is they don't get one when they spend them either. For our convenience alone, the dollar becomes a pain in the butt for vendors, especially when customers expect them to act like a bank.

absinvestor - 4-30-2011 at 10:24 AM

Thanks. I was just curious. In the mid nineties when we lived in Punta Banda it seemed the dollar was the preferred currency. Last summer I had a vendor wash and wax the motorhome. The exchange rate was about 12-1. He quoted 1200 pesos or $100 US. It didn't matter to me one way or the other so I asked which he preferred and he wanted the US dollars. He did a great job and I paid him in US dollars and tipped him in pesos!!

DENNIS - 4-30-2011 at 10:35 AM

Quote:

Originally posted by absinvestor
Last summer I had a vendor wash and wax the motorhome. The exchange rate was about 12-1. He quoted 1200 pesos or $100 US. It didn't matter to me one way or the other so I asked which he preferred and he wanted the US dollars.

At that time, the Peso was falling against the Dollar. His choice would probably be different today.

J.P. - 4-30-2011 at 10:35 AM

I live in Punta Banda and I have always used Pesos Its easier for me and for the recipant also.
Since the new law governing how much American money a buisness can deposit in a day, The preference for American money is changing also.

woody with a view - 4-30-2011 at 01:25 PM

the conspiratist in me says the MexiGovt will soon prohibit all dollar transactions, at the agencia or the banco.

you heard it here first..... :rolleyes:

capitolkat - 4-30-2011 at 01:33 PM

The exchange rate is a huge thing for some of us. We are building a house in La paz and every time the rate changes it costs us lots on the next progress payment for the work underway. When we first estimated the costs in december the rate was right around 13. Now at 11.6 or lower our costs have risen close to 9 % and unless the dollar rebounds it looks to go higher. Fortunately the first payments were above 12 but the tail end of the construction looks to be painful. Norm

Wasn't close to 13 in December

beercan - 4-30-2011 at 03:05 PM

Looks as if the closest to 13 was in February 2010 ?

2010 - Mexican Pesos to 1 USD (invert)
Average Rates
January
12.8104 MXN (20 days average)
February
12.9441 MXN (20 days average)
March
12.5721 MXN (23 days average)
April
12.2326 MXN (21 days average)
May
12.7263 MXN (21 days average)
June
12.7256 MXN (22 days average)
July
12.8204 MXN (22 days average)
August
12.766 MXN (21 days average)
September
12.8124 MXN (22 days average)
October
12.4372 MXN (21 days average)
November
12.328 MXN (22 days average)
December
12.3899 MXN (23 days average)

DENNIS - 4-30-2011 at 03:26 PM

Quote:

Originally posted by woody with a view
the conspiratist in me says the MexiGovt will soon prohibit all dollar transactions, at the agencia or the banco.

you heard it here first..... :rolleyes:

That would require a total failure of one, or the other economy. Do you forsee this?

woody with a view - 4-30-2011 at 03:45 PM

just a guess on the next domino, er, dagger to the heart of tourism.

i shoulda been more clearer-er. :lol:

[Edited on 4-30-2011 by woody with a view]

Bajahowodd - 4-30-2011 at 04:03 PM

First, in all the years of my traveling throughout Mexico, and given my mental handicaps, when the rate was 10 to 1, it just seemed so easy.

Granted, the tourist thing, is very different from folks who live part time or full time SOB, but I just couldn't ignore the ease of transactions when the rate was 10 to 1.

That said, the US dollar is, and has been in decline, owing to some extent to the trade imbalance and the deficit. When was the last time y'all can remember the Canadian dollar to be worth more than the greenback?

There's a (hopefully) sophicitcated effort being employed by the White House and the Fed to simultaneously stimulate our economy and yet maintain the dollar as the international currency.

I'm not schoooled in economics to be able to comment on the wisdom and efficacy of what's going on right now. However, for those folks, especially of a certain age, who are looking at historically low interest rates, I feel your pain.

Current interest rates are stated in percentages below one percent. At the same time, the Wall Street indicators are soaring.

Problem is, that folks closing in on retirement certainly have to wonder about the two recent market crashes that wiped out wealth. As a timing thing, what to do?

It's comparable to someone who may have sold their home in early 2008, after benefitting from years and years of inflation of real estate prices. Do they want to but back in?

You are kidding, right?????

bajaguy - 4-30-2011 at 05:03 PM

Quote:

Originally posted by Bajahowodd
...........There's a (hopefully) sophicitcated effort being employed by the White House and the Fed to simultaneously stimulate our economy and yet maintain the dollar as the international currency.........

absinvestor - 4-30-2011 at 06:15 PM

For CapitolKat the weakness in the dollar can get really expensive when using US dollars to build a house in Mexico. I think the banking system has changed but in 1995 we could earn almost 12% interest at Bancomer on a 28 day peso savings account. In 1994 our neighbor in Punta Banda had approx 100,000 US dollars in a peso account. When the peso devalued his balance in US $ was cut in half. He panicked and immediately closed his Mexican bank account. He couldn't get over the fact that he "lost 50% overnight by having savings in a Mexican bank"!! We looked at it differently. We weren't living in Mexico in 1994 and didn't have any money in a Mexican bank. However, when we moved to Punta Banda in 1995, against our neighbor's advice, we put $30000 US $ in a Bancomer peso account. That account equated to about 300000 pesos and earned between 11 and 12% annual interest or about 3000 pesos a month. The rate of return was more than double what we could earn in US dollars and since we were living in Mexico and spending pesos it really didn't matter if the exchange rate went up or down. (As long as the bank didn't go out of business.) The peso remained pretty stable in 1994 and 1995 but even if it devalued against the $ another 50% to us it didn't matter. Our intent was to spend those pesos in Mexico and not to convert those pesos back to dollars. The great interest rate helped improve our Mexico standard of living. (I don't think that US citizens can currently have a peso account with a Mexican bank but when we could it worked great.)

Riom - 4-30-2011 at 07:10 PM

Quote:

Originally posted by absinvestor
(I don't think that US citizens can currently have a peso account with a Mexican bank but when we could it worked great.)

There's no restriction on who can hold an account in Mexico (although the ID requirements of each bank can vary).

Having said that, although I leave a good float in my Bancomer peso account, and use mainly pesos for day-to-day payments in Mexico, I wouldn't keep large savings (if I had them) in any bank in any country that doesn't have a formal deposit guarantee system.

BajaGringo - 4-30-2011 at 09:36 PM

Keep a peso and dollar account at the same bank. You can move funds in either direction online and take advantage of the movement in exchange rates as your crystal ball forecasts...

wessongroup - 5-1-2011 at 08:36 AM

Hey Dennis, what ya guys use at Sharkey's ... :lol:

DENNIS - 5-1-2011 at 08:51 AM

Quote:

Originally posted by wessongroup
Hey Dennis, what ya guys use at Sharkey's ... :lol:

All tender, legal and valid, Wiley....and credit when necessary. It's an accomodating gin-mill. :biggrin:

bajaguy - 5-1-2011 at 09:05 AM

As a wise Baja resident once told me....earn dollars, spend pesos..........

DENNIS - 5-1-2011 at 09:07 AM

Quote:

Originally posted by morgaine7
No doubt a simplistic view of things (my specialty), but when the exchange rate is down, the stock market always seems to be up. So I figure I'm getting fewer pesos to the dollar but earning more dollars to exchange, ¿verdad?

Sounds like it. Amazing how the "break even point" has become an investment goal.

absinvestor - 5-1-2011 at 11:57 AM

Yep, the stock market loves a weak dollar!! Ron

capitolkat - 5-1-2011 at 01:11 PM

Beercan-- memory is a fading thing-- when we were first figuring costs the dollar was right at 13 but Dec 1 it was 12.5019. and has been on a downward trend since. The consequences to us is still an increase of 8-9% for costs of construction.

CortezBlue - 5-2-2011 at 01:25 AM

Quote:

Originally posted by capitolkat
The exchange rate is a huge thing for some of us. We are building a house in La paz and every time the rate changes it costs us lots on the next progress payment for the work underway. When we first estimated the costs in december the rate was right around 13. Now at 11.6 or lower our costs have risen close to 9 % and unless the dollar rebounds it looks to go higher. Fortunately the first payments were above 12 but the tail end of the construction looks to be painful. Norm

Rebound?

This is a result of printing more and more US Dollars. The dilution of the dollar is part of the end results. You will also see the price of gas start rising with the decline of the power of the dollar due to the dedication to purchasing oil with dollars exclusively.

J.P. - 5-2-2011 at 11:37 AM

Quote:

Originally posted by capitolkat
Beercan-- memory is a fading thing-- when we were first figuring costs the dollar was right at 13 but Dec 1 it was 12.5019. and has been on a downward trend since. The consequences to us is still an increase of 8-9% for costs of construction.

I dont know how many houses you built in thr U.S. every one i built wound up costing 10 to 15% more than the original estimate due to inflation

capitolkat - 5-3-2011 at 10:45 AM

J.P> US inflation has been running about 1-2% per annum for recent memory and I would take that in a NY minute to losing 8-9% to exchange rate fluctuation in 6 months. My build is a flat rate contract- plus any change orders. So the only way to cost more for me is for my dollar to lose value against the peso-- or to want more do-dads during construction. so far we have held the line on changes as we spent 3 years in planning the project.

J.P. - 5-3-2011 at 01:45 PM

Quote:

Originally posted by capitolkat
J.P> US inflation has been running about 1-2% per annum for recent memory and I would take that in a NY minute to losing 8-9% to exchange rate fluctuation in 6 months. My build is a flat rate contract- plus any change orders. So the only way to cost more for me is for my dollar to lose value against the peso-- or to want more do-dads during construction. so far we have held the line on changes as we spent 3 years in planning the project.

In the ideal world that might work. but I cant rember when the cost of material ever held the true inflationary rate. If true how would one explain the rise in fuel prices

oldlady - 5-4-2011 at 06:33 AM

FYI.....read this morning that the Central Bank of Mexico is reducing some of it's currency reserves (dollars) and in the last two months bought 100 tonnes of gold. Several factors influence exchange rates, but this is certainly an indicator that the peso is likely to continue appreciate vis-a vis the dollar.