I was under the impression that the peso had been pegged loosely to the US Dollar by the World Bank, but obviously I'm wrong. Can anyone explain the dollar/peso arrangement since the big financial crisis in Mexico of the 1990's please? TY
Well, I don't have a deep understanding of this either. What I do understand is that the dollar is strong because people are pulling money out of the stock market. So I imagine the dollar will stay high against the peso as long as there is this panic in the market.
This article explains what is goin on... http://www.nytimes.com/2008/10/25/business/25currency.html?pagewanted=1&_r=1&ei=5070&emc=eta1
I think I'll start wall-papering my place with my pesos stash I've been saving since the plastic material they're made of wont make for a good toilet paper substitute. :bashself:
I read the original question a bit different than the other responders. Back in the early 90's $1 US bought you over $3,000 pesos. Inflation was nuts at the time. I can rember having a handful of $100,000 peso bills. It was so bizzare to pull out 3 of them to pay for a real nice meal. But in dollars they were worth $30 or so each. In 1994 or so, and I think the World Bank had something to do with this, the peso was put on par with the dollar. That is, one dollar bought one peso. This was shortly after the Bank of Mexico, and I think this was in 1993, came out with the NP or Nuevo Peso. You could exchange $1,000 of the old pesos for $1 of the new ones. The coins then became 2 tone and the bills had NP on them. Since then, Mexico's inflation has risen faster than that of the US, hence the difference in their relative values today since the purchasing power was less, so you get more USD, GPB or whatever. But the inflation is nothing compared to what it was in the early 90's so the relative value has sort of almost leveled off in the 10 to 1 area over the last 3 or 4 years. I am operating on memory and not facts from a website so I might not be "spot on" as Steve would say, but I think I am close. Was this sort of what you were asking Davisod?
Thanks TJ.....that's what I was trying to find an intelligent response to....leave it to you, right? No offense to the others - God love ya - because I actually thought, "They'll think I'm stupid, so I'm not sure if I should ask"....hahaha. It's a more complicated a thing than I thought, and I knew it wasn't pegged to the US dollar formally or the exchange difference in these crazy days would reflect that more. But then again, I don't understand things nowadays at all. Our Cdn. dollar was a bit higher than or on par with the US, then Wall St. buckles, and even though our oil and banks are proven to be strong, our dollar is free-falling compared to yours....why - it's crazy!
From what I understand the US dollar is strong for one reason right now, lots of folks are dumping stocks (or were) and have put their money in dollars (into cash). When the stock market stabilizes, and people start buying into it again, the US dollar will probably start to slip down again, if it hasn't already.
I have lived here for over 21 years. The Mexican peso has never been 1:1 to the USD. The Argentinian peso was when they had their devaluation.
The folowing is from http://en.wikipedia.org/wiki/United_States_dollar Historical exchange rates Currency units per U.S. dollar, averaged over the year.[28] * = value at start of year. 1980*= 22.800 1985*=206.97 1990*=2,679.50 1993=3.1237 (The New Peso came into existence on Jan 1. 1993 by basicall just taking off the 3 zeros 1999=9.553 2000=9.459 2001=9.337 2002=9.663 2003=10.793 2004=11.290 2005=10.894 2006=10.906 2007=10.928 Other interesting graphs on a yearly basis can be found at : (May of 2008-10/31/2008: http://www.exchange-rates.org/history/MXN/USD/T (Graph 2003-2008) http://www.indexmundi.com/xrates/graph.aspx?c1=MXN&c2=USD&days=1825&lastday=20081020 And you can take this link (http://www.x-rates.com/d/MXN/USD/hist2002.html ) and just change the year in the url and get a yearly and monthly rate from 1993-2008. I really should get a life.
