Gypsy Jan
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Peso Plunge Squeezes Border
Global economic convulsions sent the value of the Mexican peso in relation
to the US dollar plummeting to new lows this week. In some areas of the
borderlands and in the Mexican interior, the value of the peso briefly
dived from about 10 to 14 or 17 to the dollar-a drop comparable to or
greater than the 1994 peso devaluation. The dramatic hit to the peso,
which had been so strong against the dollar in recent months that talk of
the “super peso” reemerged, will have significant effects on the US-Mexico
border economy.
For starters, Mexican money exchange houses saw business evaporate this
week. “There are no retail sales,” shrugged an employee of a money
exchange outlet in Nuevo Laredo, Tamaulipas. “Sales plunged because we do
not have any buyers.”
In Matamoros, Tamaulipas, the former president of the an association of
money exchange outlets in the border city reported business was down 30
percent.
“We know this is not exclusive to Mexico, that it is a world crisis,” said
Genaro Alonso Tavera.
The sudden shift in exchange rates began to be noticed in the flow of
two-way traffic between Mexico and the United States. Traffic lines to the
United States, where the price of dollars had soared, were visibly shorter
at the international crossings leading from the Tamaulipas border cities
of Matamoros, Reynosa and Nuevo Laredo.
On the US side, merchants in Laredo, Texas, worried that Mexican customers
who keep them in business would cut back on shopping. The scenario facing
Laredo businesses is similar in other US border cities where Mexican
shoppers usually keep the economy humming.
The peso’s downturn is also bad news for private Mexican businesses and
public institutions that have their debts in dollars.
On the other hand, some Mexican border businesses could benefit from the
peso plunge. Longer lines at Matamoros gasoline stations were already
reported as Mexican fuel became a bigger bargain.
Jose Luis Garcia Arenas, president of the money exchange branch of the
Ciudad Juarez Chamber of Commerce, urged calm and predicted the exchange
situation as well as the Mexican economy would stabilize.
To halt the wild downward spiral in the peso’s value, the official Bank of
Mexico began making more dollars available for purchase this week. It was
the first time Mexico’s central bank was forced to step in to prop up the
peso since 1998.
According to Mexican economist Rogelio Ramirez, US and international
economic indicators made the peso’s slide virtually inevitable. “What
changed wasn’t reality but the government’s recognition of reality,”
Ramirez said.
Despite the Bank of Mexico’s intervention, the peso continued showing
weakness as the week drew near an end. On Thursday, October 9, banks in
Ciudad Juarez across from El Paso, Texas, finished the day paying 12.29
pesos for each dollar and selling 12.96 pesos for each dollar. Rates at
money exchange outlets were slightly better for dollar seekers.
Gerardo Esquivel, an analyst with the College of Mexico, said decreasing
migrant dollar remittances and declining prices for oil, Mexico’s
principal export, were likely to affect the peso for some time.
“It’s possible to conclude that the Mexican peso will tend to stabilize in
the near future at a level greater than it had shown in recent months, but
less than the panic levels and nervousness we’ve observed in recent days,”
Esquivel said.
Sources: Norte, October 8 and 9, 2008. Articles by Antonio Rebolledo.
Enlineadirecta.info, October 8 and 9, 2008. Articles by Gaston Monge, Hugo
Reyna and Federico Zuniga Garcia. Diario de Juarez, October 9, 2008.
Univision, October 9, 2008. La Jornada, October 9, 2008. Articles by Juan
Antonio Zuniga and the Notimex news agency. El Universal, October 9, 2008.
Article by Gerardo Esquivel.
Frontera NorteSur (FNS): on-line, U.S.-Mexico border news
Center for Latin American and Border Studies New Mexico State University
Las Cruces, New Mexico
“Travel is fatal to prejudice, bigotry, and narrow mindedness.”
—Mark Twain
\"La vida es dura, el corazon es puro, y cantamos hasta la madrugada.” (Life is hard, the heart is pure and we sing until dawn.)
—Kirsty MacColl, Mambo de la Luna
\"Alea iacta est.\"
—Julius Caesar
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Woooosh
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Last night soutbound cars entering Mexico at the San Ysidro POE were being searched specifically for cash. The TJ news reported that large amounts of
US Dollars were being smuggled into Mexico. They showed the inspectors pulling bundles of dollar bills out of hidden spots in cars. The drugs go
north and the cash goes south.
Think this is a coincidence with current Peso devaluation or are the narcos trying to get another 25% profit on top of the 100% they already took?
"In some areas of the borderlands and in the Mexican interior, the value of the peso briefly dived from about 10 to 14 or 17 to the dollar-a drop
comparable to or greater than the 1994 peso devaluation." WOW- it got to 17 ????
[Edited on 10-10-2008 by Woooosh]
\"The only thing necessary for the triumph of evil is for good men to do nothing\"
1961- JFK to Canadian parliament (Edmund Burke)
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toneart
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I assume those who are stashing dollars while crossing the border south are carrying more than $10,000. That seems pretty risky in more ways than one.
Last I heard, you can bring up to $10,000 cash.
This peso devaluation has the potential for a reason by the bad guys to target travelers(?) I hope not. 
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tjBill
Senior Nomad
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| Quote: | Originally posted by Gypsy Jan
Gerardo Esquivel, an analyst with the College of Mexico, said decreasing migrant dollar remittances and declining prices for oil, Mexico’s principal
export, were likely to affect the peso for some time. |
Its looks like the peso will stay weak for quite some time. 
[Edited on 10-11-2008 by tjBill]
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CaboRon
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| Quote: | Originally posted by tjBill
| Quote: | Originally posted by Gypsy Jan
Gerardo Esquivel, an analyst with the College of Mexico, said decreasing migrant dollar remittances and declining prices for oil, Mexico’s principal
export, were likely to affect the peso for some time. |
Its looks like the peso will stay weak for quite some time.
[Edited on 10-11-2008 by tjBill] |
It's only tradition ....
Stuck in the third world ....
CaboRon
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Woooosh
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I think the Canadian border just opened up though. The Canadian dollar is the lowest I have seen it in years- just .85 ! Bet that will end the
shopping spree they have been enjoying the past couple years.
\"The only thing necessary for the triumph of evil is for good men to do nothing\"
1961- JFK to Canadian parliament (Edmund Burke)
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dao45
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Actually as far as US customs is concerned you may export any amount of cash or monetary instruments.But if it is over $10000 you must report it and
declare it.As far as the mexican side goes I sure wouldnt want any official or any one else there to know I had over $10000 in cash
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The Gull
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| Quote: | Originally posted by Woooosh
Last night soutbound cars entering Mexico at the San Ysidro POE were being searched specifically for cash. The TJ news reported that large amounts of
US Dollars were being smuggled into Mexico. They showed the inspectors pulling bundles of dollar bills out of hidden spots in cars. The drugs go
north and the cash goes south.
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What? The cash cannot go through the same tunnels that take the drugs and pollos to the US?
That report of Mexican agents finding cash in cars has got to be faked. None of the agents at the border would be so stupid as to report finding
bundles of cash in a car.
�I won\'t insult your intelligence by suggesting that you really believe what you just said.� William F. Buckley, Jr.
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Ken Cooke
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| Quote: | | Originally posted by toneartThis peso devaluation has the potential for a reason by the bad guys to target travelers(?) I hope not. |
I've had more than one occurance in Tijuana where I have been asked if I needed "assistance" in using the ATM machine.
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The Gull
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| Quote: | Originally posted by Ken Cooke
I've had more than one occurance in Tijuana where I have been asked if I needed "assistance" in using the ATM machine. |
That has been known to occur in Riverside. Put the card in the slot for the card, not the money return and quit shouting "hello" at the screen.
Taking these steps will lessen the number of people approaching you and offering assistance.
�I won\'t insult your intelligence by suggesting that you really believe what you just said.� William F. Buckley, Jr.
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Ken Cooke
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| Quote: | Originally posted by The Gull
| Quote: | Originally posted by Ken Cooke
I've had more than one occurance in Tijuana where I have been asked if I needed "assistance" in using the ATM machine. |
That has been known to occur in Riverside. Put the card in the slot for the card, not the money return and quit shouting "hello" at the screen.
Taking these steps will lessen the number of people approaching you and offering assistance. |
That's funny. I'll remember that one!LOL
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