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The peso is like a runaway freight train going downhill without brakes.

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Post by Playaboy Thu Jan 21, 2016 8:52 am

There is now talk in Mexico of "20/20", pesos to the dollar and barrel of oil.

Wall Street Journal

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Post by gringal Thu Jan 21, 2016 8:56 am

I know David well enough to say he's a calm, cool, collected and classy kind of guy whose brain is in gear before his mouse hits the send button.
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Post by Clete Thu Jan 21, 2016 10:18 am

http://eleconomista.com.mx/mercados-estadisticas/2016/01/20/dolar-podria-llegar-19-proximos-dias-analistas

19 in the next few days. How long until it hits 20?


"El especialista mencionó que mientras la cotización del precio internacional del petróleo siga cayendo, la depreciación del peso mexicano no se va detener, pese a las intervenciones del banco central, ya que en estos momentos está pesando más las operaciones especulativas.

Por su parte, el analista senior de CIBanco, James Salazar, anticipó, de acuerdo a los movimientos que se están dando dentro del mercado muindial del petróleo, que no sería raro ver en las siguientes semanas cotizaciones cercanas a 20 pesos."

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Post by David Thu Jan 21, 2016 11:36 am

I saw one forecast that predicted 22/$ by year end.
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Post by Playaboy Thu Jan 21, 2016 12:31 pm

22 pesos to the USD would not surprise me at all.

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Post by Clete Fri Jan 22, 2016 6:14 pm

The peso closed at 19.05 today is spite of a small rise in the price of its oil.

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Post by David Fri Jan 22, 2016 6:19 pm

According to Yahoo Finance it closed at 18.449. It opened at a bit over 18.50, so slight improvement depending on your perspective.
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Post by Clete Fri Jan 22, 2016 6:48 pm

"CIUDAD DE MÉXICO (22/ENE/2016).- Los mercados registraron ayer una jornada de tendencias encontradas. Mientras el precio de la mezcla mexicana del petróleo tuvo un repunte tras las pérdidas de los últimos días al culminar la jornada en 20.32 dólares desde el anterior 18.90 dólares por barril, el mercado cambiario sufrió otra jornada de fricciones y cerró en 19.05 pesos por cada billete verde."

http://www.informador.com.mx/economia/2016/639951/6/el-rebote-en-el-precio-del-crudo-no-logra-dar-aliento-al-peso.htm

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Post by David Fri Jan 22, 2016 8:53 pm

19.05 is the buy $US price, not the sell $US exchange price. XE says 18.4385. Pretty close to what you will get from your ATM.
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Post by Clete Fri Jan 22, 2016 9:37 pm

I know the difference betweeen buy and sell. If someone here has an obligation in dollars they will pay the higher rate. Which is the rate that matters most to the people of this country. Importers or people that want or need to travel outdide the country will be paying the higher rate. The economy doesn't revolve around retirees using the ATM.

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Post by Ojalero Fri Jan 22, 2016 10:12 pm

Current rates at the border FWIW:

TIPOS DE CAMBIO EN EFECTIVO EN VENTANILLA
COMPRA 17.00
VENTA 18.30
TIPOS DE CAMBIO INFORMATIVOS SOLAMENTE
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Post by Playaboy Sat Jan 23, 2016 7:45 am

Published bank rates are only a guide, a rate most people will never get. We get ATM rates (different at each bank plus fee's) or cash exchange rates.  

These are the REAL rates for people with cash.
Banco Azteca and San Ysidro Rates

On the east coast, where USD's are still widely circulated, there are discounts to be had with using dollars for the smart buyers.  Businesses are starting to want USD's more than pesos.  I am seeing great exchange rates at the supermarkets.  Yesterday I received 18.3 at Chedraui buying groceries with USD's.  

The trend around here is moving toward the old days when business competed by giving the better exchange rates.

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Post by David Sat Jan 23, 2016 8:35 am

If your debit card has VISA symbol on it you'll get the published VISA rate from your bank less any fee the ATM and bank charge. Clete, most people on this board are expats interested in how many Pesos their $ will get them. "Most people in Mexico" don't visit this site.
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Post by Trailrunner Sat Jan 23, 2016 8:54 am

You're such a nice guy, David.
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Post by Clete Sat Jan 23, 2016 10:04 am

David wrote:If your debit card has VISA symbol on it you'll get the published VISA rate from your bank less any fee the ATM and bank charge.  Clete, most people on this board are expats interested in how many Pesos their $ will get them.  "Most people in Mexico" don't visit this site.

I thought the discussion was about the peso's devaluation and not solely how it's declining value benefits expats. But the benefit to expats will probably be briefly enjoyed. Inflation will rise and erode the present windfall expats are presently enjoying. But you are correct, most expats are concerned how it affects them directly and in the short term and not about the negative consequences on "most people in Mexico".

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Post by David Sat Jan 23, 2016 11:14 am

The discussion is about the declining value of the Peso. It has not been devalued. Devaluation is an act by a government that controls the "value" of their currency, such as China. I've been here 11 years and the Peso had been steadily declining the entire time. The good news is that it is not alone, the $CDN, the Colombian Peso and many others have lost similar value over the last year due to the strength of the $USD. What this means is that it's not the fault of Mexico that its currency has lost value. It's principally due to the decline in the price of oil. Several years ago the US suffered from a weak dollar which made all imported goods, especially oil, very expensive. Interestingly the US did not suffer a period of high inflation or a host of negative consequence as you are predicting for Mexico. Time will tell. My point is that Mexico is not unique in today's currency market.
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Post by CanuckBob Sat Jan 23, 2016 12:28 pm

Jaja.....the USD's most recent "weak days" were 1.02 CDN not $1.40 CDN. The only currency it may have been really weak against was perhaps the Euro or Pound? Certainly not enough importation from Europe to warrant inflation. On the other hand Canada and Mexico import a ton of stuff from the US so inflation is definitely possible IMO particularly in Mexico.
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Post by David Sat Jan 23, 2016 1:15 pm

Never said the $US was weak vs. $CDN. It was weak vs the Euro, Pound, Swiss Franc and the Yen as recently as April 2014 when the Euro cost $1.38US. It's $1.08 today. I did say that the $CDN has taken the same ride down as the $MX. The USA imports from all over the world and has the largest trade deficit of ANY country. So when the $US was weak it hurt, especially all the oil being imported then, everyone else was paying way less, ouch! The price of French wine went thru the roof! Likewise European Cars,etc.
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Post by CanuckBob Sat Jan 23, 2016 1:25 pm

Well I guess my point was that since product from Canada and Mexico are two of the US's biggest imports (In fact #1 & #3) then it would matter greatly if the USD was down 30% or 40% against those two currencies, far more than any European currency. Skyrocketing prices on French wine or European cars would not warrant inflationary measures.....jaja.

I'm hoping we get a chance to see one of these days........ Beer
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Post by David Sat Jan 23, 2016 2:19 pm

Yes, me too. I'd like to see the NAFTA gang form our own oil cartel. They could fix prices in the area and heavily tax anything imported.
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Post by CanuckBob Sat Jan 23, 2016 3:12 pm

Great idea. With Mexico opening up their oil industry we just may see something like this.
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Post by Clete Sat Jan 23, 2016 4:16 pm

David wrote:The discussion is about the declining value of the Peso.  It has not been devalued.  Devaluation is an act by a government that controls the "value" of their currency, such as China.  I've been here 11 years and the Peso had been steadily declining the entire time.  The good news is that it is not alone, the $CDN, the Colombian Peso and many others have lost similar value over the last year due to the strength of the $USD.  What this means is that it's not the fault of Mexico that its currency has lost value.  It's principally due to the decline in the price of oil.  Several years ago the US suffered from a weak dollar which made all imported goods, especially oil, very expensive.  Interestingly the US did not suffer a period of high inflation or a host of negative consequence as you are predicting for Mexico.  Time will tell.  My point is that Mexico is not unique in today's currency market.

If you have been here 11 years then you might remember in 2008 the peso lost considerable value against the US dollar and the official inflation rate that year reached nearly 7% which was almost double the previous year.

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Post by CanuckBob Sat Jan 23, 2016 5:22 pm

No doubt that if the USD exchange rate remains in the high teens (or higher) for any given amount of time there will be inflation.......unless the Mexicans can get the same products and services from Canada.........hmmmmmm. Time for a Canada/Mexico summit meeting. Canada can bring their new partner China along for the talks. With the current price of oil the cost of transportation will be insignificant.
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Post by David Sat Jan 23, 2016 5:43 pm

Clete wrote: If you have been here 11 years then you might remember in 2008 the peso lost considerable value against the US dollar and the official inflation rate that year reached nearly 7% which was almost double the previous year.

Mas o menos. Inflation for 2007 was 3.76, for 2008 it was 6.53. A big increase but not nearly double. The big currency move was in Q4 and Q1/2009

http://www.inflation.eu/inflation-rates/mexico/historic-inflation/cpi-inflation-mexico.aspx

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Post by Clete Sat Jan 23, 2016 6:12 pm

David wrote:
Clete wrote: If you have been here 11 years then you might remember in 2008 the peso lost considerable value against the US dollar and the official inflation rate that year reached nearly 7% which was almost double the previous year.

Mas o menos.  Inflation for 2007 was 3.76, for 2008 it was 6.53.  A big increase but not nearly double.  The big currency move was in Q4 and Q1/2009  

http://www.inflation.eu/inflation-rates/mexico/historic-inflation/cpi-inflation-mexico.aspx


Not nearly double? Nearly 74% increase. And taking your source as valid, 6.53% is far above what is considered high inflation. Compare that with nearly 0% in the US. Regardless, the peso loses value against the dollar always sparks higher inflation. And this time around the peso has fallen far more than in 2008. And during 2009 and 2010 the peso strengthened and inflation fell. So to deny there is a direct correlation between the exchange rate and inflation is foolish.

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Post by David Sat Jan 23, 2016 6:41 pm

The Peso strengthened some in 2009/10. May 31, 2009 13.17, Jan 1, 2010 13.06, Dec 1, 2010 12.37 . Never the less, currency value is but one cause of inflation but it is not the sole driving force. Money supply, food costs, transportation and other costs factor in. Only in the most general terms can you say that there is a correlation. BTW, inflation in the USA in 2008 was 3.8 % not 0%. In those years, and up until recently, Mexico was directly causing some of its own inflation by the regular increases in gasoline/diesel and electricity.
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