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Peso Rate Alert - Nov. 13 2018

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To celebrate AMLO's birthday, the USDMXN is trading around 20.50 and trending up.   It's my amateur experience that regime-level themes are relatively persistent, as international hot money measures every situation in terms of creating further profit trends.   

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it great if you leave money in mexico , you get 7.8 % or more

after three years that's about 23% gain  or more makes up for the 2% on money in USA.  and any currency up and downs

long term you win

some of us are smart enough to buy pesos. and get over 7.8%

example about buying 100,000 peso back three years ago at about 17 pesos to the dollar in three years getting over 7.8% that's over 23 %   23000 pesos.  you know have over  123000 pesos three years later.

That about 5882 US dollar purchase to get 100,000 pesos at 17 three years ago

if money left in USA

5882 US at about 2% over three years , i f your that lucky to get that much,  about 117 per year  in interest over year three years 117 x 3  351 dollars in interest        5882 + 352= 5234 in three years.

so today i take my about  $5234 and change it for pesos at 20.50  i will get  today about 108,000 pesos

i am ahead 123000 - 108000 =  about 15000 pesos

i took the risk of buying pesos three years ago,  I am ahead   a little bit did not lose because of over earning 7,8%

sure go get weaker another 5% per year, but i making over 7.8% interest in mexico per year.

the peso may being paying soon over 8.5% i will be ahead even more if the new president will need to rates  to make investment in mexico attractive.

this i without compounding, if did that calculation with compounded interest it  would  reflect what is really happening.

 

this is just a rough calculation to work with, do your own due diligence to see if this would work for you.

yes you have currency risk country risk, political risk but adding up all three i see a small risk in getting over 7.8 fixed interest.

if Amlo comes in a  good budget in DEC 2018.   Peso could go back to 19, or bad budget and peso goes to 22

i am for  good budget forecast and hopefully peso will stabilize.

Any have any thoughts on this or done this

 

 

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When dollar is up, we buy pesos.  When dollar is down, we spend pesos.  Remember also to compare prices of goods and services in pesos to realize the exchange rate does not accurately reflect the actual purchasing power of the peso.  Interesting piece about this recently pointed out a "big Mac" costs half in Mexico what it does in the U.S. at the current exchange rate.

Not as cheap as it used to be to live here by a long shot but still very good value for the money.  

 

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With the price of crude oil falling this cannot be good news for Mexico.  Sadly, I would expect the peso to also decline.

This of course means more pesos per dollar.

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Most major currencies are higher (devalued) in relation to the US dollar now.  AMLO's term hasn't started yet..and he probably won't be any worse for Mexico (and maybe even better!) than his predecessor.

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20 hours ago, traderspoc said:

it great if you leave money in mexico , you get 7.8 % or more

after three years that's about 23% gain  or more makes up for the 2% on money in USA.  and any currency up and downs

long term you win

some of us are smart enough to buy pesos. and get over 7.8%

example about buying 100,000 peso back three years ago at about 17 pesos to the dollar in three years getting over 7.8% that's over 23 %   23000 pesos.  you know have over  123000 pesos three years later.

That about 5882 US dollar purchase to get 100,000 pesos at 17 three years ago

if money left in USA

5882 US at about 2% over three years , i f your that lucky to get that much,  about 117 per year  in interest over year three years 117 x 3  351 dollars in interest        5882 + 352= 5234 in three years.

so today i take my about  $5234 and change it for pesos at 20.50  i will get  today about 108,000 pesos

i am ahead 123000 - 108000 =  about 15000 pesos

i took the risk of buying pesos three years ago,  I am ahead   a little bit did not lose because of over earning 7,8%

sure go get weaker another 5% per year, but i making over 7.8% interest in mexico per year.

the peso may being paying soon over 8.5% i will be ahead even more if the new president will need to rates  to make investment in mexico attractive.

this i without compounding, if did that calculation with compounded interest it  would  reflect what is really happening.

 

this is just a rough calculation to work with, do your own due diligence to see if this would work for you.

yes you have currency risk country risk, political risk but adding up all three i see a small risk in getting over 7.8 fixed interest.

if Amlo comes in a  good budget in DEC 2018.   Peso could go back to 19, or bad budget and peso goes to 22

i am for  good budget forecast and hopefully peso will stabilize.

Any have any thoughts on this or done this

 

 

Any recommendations on secure banks in the Lakeside area for checking/savings paying these kinds of returns?  Or what kind of investment is paying this return?

So far I have no bank account in Mexico but this might be wrong minded?  Been using Schwab and withdrawing using ATM up until now.  Not very investment savvy I'm afraid…………...

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First off, when you have money in a Mex bank, it is in pesos. If you earn 7% per year in peso terms for 8 years, you have 56% more pesos, perhaps more if compounded. But there were 10 pesos to the dollar then and 20 now, you have lost 50% of your principle. Now MIGHT be a good time. I prefer keeping my $ in the US, earning investment returns in excess of 7% per year and using ATM's here for day to day expenses, which are half of what they cost 8 years ago. 

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I have a banking and brokerage account at Actinver. One of the reason I have a brokerage account is that I can wire US dollars to a dollar account I have a the brokerage, something the bank does not offer as Tom just posted.  Then based on my broker's advice I slowly buy pesos as things look better. In fact I just purchased $5,000 US worth of pesos once it just recently hit 20 to 1.  I am a small time investor but so far have been able to covert when it has been at least 20 to 1 in the last year or 2.

I am sure there are risks but so far, I guess I have been lucky.

 

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TomGates  are you not talking about investment accounts?   This is different from a bank account in a Mexican bank  whose only  purpose is to have a ready supply of pesos available to meet ones needs.   I lenjoy  having a Debit card so when I go to Costco for example I do not have to carry a lot of pesos.  I use it regularly in Superlake and Walmart etc.   It is handy for many other one time or infrequent expenses.  I write a Walls Fargo check and deposit into my account.  I am not worried about the daily fluctuation once the pesos are in my account or what money and taxes I pay on that money in the bank.  I also have my social security deposited into that account and it is deposited at full value.  My bank takes a 0.6 deduction for processing the check.  For example, if the exchange rate is 20/1 at the time the process the check I will get and exchange of 19.4/1

 

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1 hour ago, tomgates said:

First off, when you have money in a Mex bank, it is in pesos. If you earn 7% per year in peso terms for 8 years, you have 56% more pesos, perhaps more if compounded. But there were 10 pesos to the dollar then and 20 now, you have lost 50% of your principle. Now MIGHT be a good time. I prefer keeping my $ in the US, earning investment returns in excess of 7% per year and using ATM's here for day to day expenses, which are half of what they cost 8 years ago. 

True to some extent Tom but when you take into account purchasing power of the Peso in Mexico the picture is less grim.  Also remember things can go in the other direction and it pays to cover ones bets.  The U.S. is running record deficits and other nations are seeking to replace it as the reserve currency.  At some point either or both could drastically affect the exchange rate in the other direction.

Again I refer to the "Big Mac index" as an indication our Pesos have a lot more purchasing power than the current exchange rate reflects.

 

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Correct. 80% of our expenses when we are in Mexico are in pesos, and we are getting 2x as much value now compared to 2008-2009. Restaurants, car purchases, home projects, utilities, staff salaries, and on and on. More than makes up for purchases at Costco, SuperLake or Pancho's. The pool we had built in 2008 cost $170,000 pesos or $17,000usd. Now it might cost $220,000 due to general inflation but only $11,000usd. 

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