Dollar-to-Peso Effects

March 25, 2020 1:36 PM

How does the rapidly falling peso affect everyday life for lower and working class Mexicans?

I am dumb. I had undergrad macro/micro but know shit about currency.

What I really want to know is: is this fucking over my Mexican friends even more?

Thanks!

posted by j_curiouser to Work & Money (7 answers total)

Response by poster: background
posted by j_curiouser at 1:50 PM on March 25, 2020

Best answer: it really depends where they're at and what they're buying (aka domestic or produced in Mexico).

I live in Chile, and the CLP has lost significant power in recent months due to social unrest, not including the strengthening of the USD.

This could also "help" those that are sending back USD to Mexico (assuming they still have jobs)... but in these times is all crazy and each day is different.
posted by aggienfo at 2:51 PM on March 25, 2020 [1 favorite]

Best answer: Speaking from the view of an upper class expat I’ve only seen luxury goods (which are generally the same as American prices) adjusting their MXN cost right now. Prices have not changed on day-to-day working class purchases, and I’m not sure what’s going on in the lower class markets. Of course all of the open stall markets are shut down right now so everything is up in the air anyway.

The combination of the currency plunge and quarantine makes it very difficult to tease out how everyone is doing, but I’m going to have to give a significant edge to coronavirus when it comes to affecting day-by-day lives right now.
posted by Tell Me No Lies at 3:21 PM on March 25, 2020 [2 favorites]

Best answer: I just talked to a friend who has done the live-in-the-U.S.-send-money-home thing and he said the current surge is cause for celebration, and if it were possible people would be trying to get all the extra hours they could to take advantage of it.
posted by Tell Me No Lies at 3:36 PM on March 25, 2020 [2 favorites]

Best answer: Not sure if this is entirely relevant, but it might give some color on the exchange rate aspect. The diving peso (MXN) has two drivers: Most important: the price of crude, one of Mexico’s key source of dollars. Second most: the US dollar itself, which is having one of its paradoxical upswings in the face of tough economic news (cleanest shirt in the hamper, etc).

So: carpe dollar-em if you’re sending dollars home to mexico. ‘Cuz you never know how long you’ll have, and mean reversion is a real thing — at least in the longer term.
posted by Citizen Cane Juice at 4:37 PM on March 25, 2020 [1 favorite]

Response by poster: Sending money back, I guess that is the Crux of it all. Thanks all!
posted by j_curiouser at 4:52 PM on March 25, 2020

Remittances (sending money home) are not chump change either.

Remittances represent an important source of currency for the country and currently comprise 2,3% of Mexico's Gross Domestic Product (GDP), surpassed only by automobile exports and Foreign Direct Investment. The amount of remittances Mexico received in 2015 exceeds income from tourism and oil exports.
posted by Tell Me No Lies at 8:17 PM on March 25, 2020 [1 favorite]