This Category Header addresses various trends and issues that affect the USD/Peso exchange rate, the economic realities and forecasts, and the general activities withing politics, markets, and other asylums.
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© Steven M. Fry
Read-on MacDuff . . .
I have a question for Americans with Mexican bank accounts. Have you not lost 20%+ of your money, in U.S dollar terms, in the past 12 months? If you converted $1,000.(USD) into Mexican pesos on January 23, 2015, then re-converted those pesos back into U.S. dollars today, January 23, 2016, wouldn’t the money received be less than $800.00??? Inflation is an interesting topic, at least when you’re not on the losing end of a currency trade.
I’m reminded of a conversation I had with an elderly American gentleman on a bus in Mexico some 25 years ago. He lived in a rent-controlled apartment in Mexico City. I don’t remember the rent he paid in pesos, but in U.S. dollars, it was like $1.49. I’d write ha, ha, but it’s not funny. The building was near-collapse, with a non-functioning elevator and intermittant plumbing issues. Mexico has come a long way in 25 years. Thanks to inflation! (Well, free trade, too. Plus an “open border” with the U.S.)
But … he only ‘loses’ the 20% if he exchanges back to US dollars.
Notice that Mexican real estate prices/values have not jumped 20% …
Notice that the price of electricity has not jumped 20%.
Notice that the price of tortillas has not jumped 20%.
The recent reduction of PEMEX gasoline prices actually give 3% lower prices now than in early 2015.
Even the same cheap flat screen TVs that cost $3,000 pesos at La Navidad in 2014, still cost $3,000 pesos at La Navidad in 2015.
So, It depends on who is shopping and what they buy:
Mexicans who eat a lot of meat, and Mexicans who buy a lot of American products … shopping at Costco & Home Depotfor foreign goods … likely are spending 20% more for their consumer goods than they did a year ago.
Other Mexicans, living simpler lifestyles have not yet experienced the effects of the 20% loss of MXN peso value versus the US dollar.
I was doing a search on the phrase “gentrification of Mexico” and came upon the following book which y’all may find of interest. http://utpress.utexas.edu/index.php/books/crooth
I did that search after seeing the following house for sale in Antigua, Guatemala. https://guatemala.craigslist.org/reo/5385029004.html This is just one of many similar-type homes in the Antigua area. If I were a local Antiguan, I’d be seething with rage. I’m not talking about the local Guatemalan real estate broker or shopkeeper. I’m talking about campesinos, the average common-folk of Guatemala, Central America, and Mexico, who have another boot upon them, marginalizing their existance. Oh sure, there are many arguments that can be made to put a good light on this invasion of wealth, but, to my mind, it’s ugly.
If Trump’s Wall is built, this pot will surely boil over.