Jump to content
Chapala.com Webboard

Exchange Rate


Floradude

Recommended Posts

The Mexican peso to the US dollar is 17.9002 this morning. This is an all time high since all the years I have been in Mexico. Looks like it could go over 18?

This is terrible for Mexico but at the same time is favorable for those of us who convert dollars to pesos to live in Mexico.

Link to comment
Share on other sites

I have a "forced" Bancomer saving account. At this exchange I can't bring it back NOB without losing 30% - so, it's trapped in MX.

What's a "forced bank account"?

Did they force you to open it?

Link to comment
Share on other sites

Mainecoons,
Remember that land and real properties (buildings, homes, apartment bldgs, commercial bldgs), and their value, are viewed very differently here.

Over 160 million Americans (over 50%) are just 1 paycheck from being homeless* , while Mexicans simply do not carry the big debts that Americans assume is normal.

Mexico has been, and is, a cash culture.

17% of average Americans cannot pay their monthly credit card debts.

Over 50% of Americans have no net real assets.

Americans borrow for cars, or lease cars they cannot afford to buy.
Americans borrow for food (paying with credit cards).
Americans generally do not own their own homes.
Americans generally (over 60%) do not save and instead they count on their government to pay for their retirements.

Mortgages are a rarity in Mexico.

Land represents stability in Mexico.
Land & property are the fundamental measures of security for Mexicans.

MXN pesos values can fall, but the owned-land remains.

Americans trust printed paper (dollars), even as the US government has few reserves and $18 Trillion of debt.

Americans trust in artificial electronic stocks, and frequently-corrupt markets - whose values fluctuate 1% to 3% a day.

Which belief system makes better sense?





* http://www.marketwatch.com/story/most-americans-are-one-paycheck-away-from-the-street-2015-01-07

Link to comment
Share on other sites

After considering how Mexicans view wealth, stability, security, personal debt, and land ,
can we Americans understand that our belief in markets, electronic stocks, paper money, and massive debts just do not fit with the centuries of Mexican practices?

When the MXN peso devalues, Mexicans wait ... and Mexicans can rely on land prices to ultimately recover.

This system works because the ongoing costs of owning land in Mexico are very small:
~ Mexicans own their land ... no mortgages to pay, so wise Mexicans can just sit on the property until the property values recover.
and

~ Mexican property taxes are so low that a wise Mexican can sit on a property, waiting a year or 3 to sell, even when the MXN pesos have devaluate.

In other words, Mexicans careful money-management habits are a long-game long-view,

without all the debt-pressure and high-high property taxes that Americans choose to shoulder.

Link to comment
Share on other sites

A friend has a tequila factory and a few months ago when the pesos hit over 14 the tequila trade group gave a report saying that it could hit 20 this year.

Link to comment
Share on other sites

Consider how the US economy crashed in 2007 - 2010, falling like a house of cards, with a staggering 40% of real unemployment.

Then consider how Mexico continued on, with stability, between 2007 - 2014.

Compare our two stock markets.

The US Stock Markets ... unstable at crazy levels between 2008 - 2014.

US markets started at 14,000 in late 2007, then fell, and fell, and ultimately fell even more catastrophically to 6,800 (52% losses) in 2009, and then took 7 full years to get back to 14,000,

while the Mexican Bolsa started at 30,000 at the same time, fell briefly only to 20,000 in 2009, and COMPLETELY RECOVERED by 2010 ... five full years before the US markets recovered.

Land ownership, personal fiscal discipline, and long-term thinking (caution) make Mexico's personal household economies very different from the wild swings and wild risks of Americans personal finances.

Link to comment
Share on other sites

Meanwhile the minimum wage in Mexico is less than 5 bucks a day....

Oh,and the stats the Mexican government puts out regarding unemployment are a bad joke.

cb,

Fun dichotomies between how the two countries view things. Mexico and Mexicans are very concerned about poverty and fixing poverty - as the Mexicans we know are very troubled by the low minimum wage and are very troubled by the lack of good jobs.

Compare that to the USA, where over 50% (160 million Americans) are one paycheck away from homelessness, yet American political leaders (except Bernie) and America's Big Media say very little about it.

Americans are more concerned about a handful of 'patriots' occupying a bird-sanctuary.

http://www.marketwatch.com/story/most-americans-are-one-paycheck-away-from-the-street-2015-01-07

http://www.alternet.org/election-2016/45-million-americans-live-poverty-you-wouldnt-know-it-watching-2016-coverage#.Vo_wVLk19bU.facebook

Link to comment
Share on other sites

What does that do to the price of houses? Harder to sell?

Most houses in Mexico for sale, are priced in pesos. Family member just bought a nice new condo near Andares in Guad., peso priced and nothing has changed on the pricing in the development because of peso/US dollar exchange fluctuations.

Link to comment
Share on other sites

Most houses in Mexico for sale, are priced in pesos. Family member just bought a nice new condo near Andares in Guad., peso priced and nothing has changed on the pricing in the development because of peso/US dollar exchange fluctuations.

Since when? Most homes are priced in USD in this area, we couldn't even get our MX landlord to put our lease in Pesos, he wanted usd paid in Pesos.

Link to comment
Share on other sites

Since when? Most homes are priced in USD in this area, we couldn't even get our MX landlord to put our lease in Pesos, he wanted usd paid in Pesos.

Maybe at Lakeside or other expat enclaves,the the rest of Mexico prices things in pesos for the most part.

Link to comment
Share on other sites

Most houses in Mexico for sale, are priced in pesos. Family member just bought a nice new condo near Andares in Guad., peso priced and nothing has changed on the pricing in the development because of peso/US dollar exchange fluctuations.

Since when? Most homes are priced in USD in this area, we couldn't even get our MX landlord to put our lease in Pesos, he wanted usd paid in Pesos.

Since the development started.....Vista Magna in Colonia Las Cumbres, Zapopan. An area just north of Av. Vallarta (near Costo) and west of Av. Patria. A huge development of homes and apartments, all priced in pesos, and not subject to any exchange rates.

Depending on size of unit or home, prices can start at 3 million pesos up to 13 million pesos or more,

Believe it or not, the peso is the dominant currency in the Guad. Metropolitan area real estate.

Link to comment
Share on other sites

Since when? Most homes are priced in USD in this area, we couldn't even get our MX landlord to put our lease in Pesos, he wanted usd paid in Pesos.

I think it's fair for everybody in the transaction to have rent stated in dollars and paid in pesos. That way the owner of the property gets a differing amount each month for rent depending on the value of the peso and the renter pays the same in dollars every month. Of course, this only works if your income is from the US.

Link to comment
Share on other sites

Lets us hope we do not experience events in 1982

The eruption of the debt crisis

February, 1982
A sharp decline in international reserves forces the Mexican government to devaluate the peso, increasing the dollar-denominated debt burden, mainly to US commercial banks (Figures 1 and 2). Despite the devaluation of the peso, Mexico is unable to stop its loss of reserves and runs out of cash. International reserves are only sufficient to cover three weeks’ of imports.

August 12th, 1982
Mexico’s Minister of Finance Silva Hertog informs the US government and the IMF that Mexico is unable to service its external debt of USD 80bn (FDIC, 1997).

September 1st, 1982
The government nationalizes Mexico’s private banking system in order to prevent bankruptcy of the private banking sector and imposes comprehensive exchange controls. In the following months, a de facto moratorium on debt service exists. All payments on the private sector debt cease, as well as most payments on the principal of the public sector debt (Buffie, 1989).

Link to comment
Share on other sites

Comparing 1982 to today, Mexico's reserves are still solid:

Mexico currently has $172 million US dollars worth of reserves, ( 13.7% of GDP )

while the USA only has $118 million US dollars worth of reserves. ( 0.7% of GDP )


as the US federal debt will soon top $19 Trillion. ( 107% of GDP )

US federal debt in 1982 was just $1.1 Trillion pre-Reagan's deficits. ( 17% of GDP )


https://www.imf.org/external/np/sta/ir/IRProcessWeb/data/mex/eng/curmex.htm

Link to comment
Share on other sites

US dollar 'strength' is coming from increased consumer spending and increased state & local government spending.

Real US economic strength?
Commercial/Industrial economic investments are down for 2015.

For the first time since 2008 (Bush Cheney's last year), US manufacturing lost output in 2015, as a -1.2% overall loss of manufacturing output between Nov. 2014 - Nov. 2015..

After 6 straight years of steady manufacturing increases, US manufacturing has been falling in Sept, Oct, and Nov ... as:

June 0.0 ,
July +0.8 %
Aug +0.2
Sept -0.1 %
Oct -0.4%
Nov -0.6%

So one trend for is for decreasing US real economic might, due to a TOO strong US dollar suppressing US exports.

Link to comment
Share on other sites

The trend for decreasing US real economic might, due to a TOO strong US dollar suppressing US exports appears to be continuing ... even though the US balance of trade improved significantly under Obama (improving by $25 billion)

Still US imports of consumer goods ( Americans buying lots of Chinese stuff) stays higher than Mexico's ...

unbalancing US imports/exports. ... $43 billion more US imports than exports. ( 0.24% of GDP )


united-states-balance-of-trade.png?s=ust

Link to comment
Share on other sites

Archived

This topic is now archived and is closed to further replies.

×
×
  • Create New...