Strong dollar

When the dollar gets strong like it is right now (16.7 pesos to dollar, 1 euro =$1.12. US$1=CAD$1.31) it obviously affects you if you are visiting the USA.

But I've always heard that because oil is priced in dollars, a lot of other things go up as well in other countries. The price of gasoline is obvious, but I would assume it affects underlying shipping costs.

My question is to foreign forum members, can you feel it in your day to day lives when the dollar goes up?

Quote: Pacomartin

My question is to foreign forum members, can you feel it in your day to day lives when the dollar goes up?

Oh, yes. For one thing newspaper headlines scream "USD hits 17 pesos!"

It's complicated here because oil is produced domestically but some gas is imported, oil prices have fallen in dollar terms, and the government's oil monopoly allows them to raise gas prices in pesos constantly (gas prices have never fallen in peso terms in Mexico, not ever).

Wow, I had no idea it was that high a peso to dollar ratio now. Wasn't it also very high around 2000 or so?

Quote: DRich

Wow, I had no idea it was that high a peso to dollar ratio now. Wasn't it also very high around 2000 or so?

I don't recall exactly.

In 1995 it was 3.50. That's when the floor fell from under and things got really bad.

Earlier this year it stood at around 15 and a fraction. I got lucky and scored 14.62 at an exchange house at the airport before my trip to Vegas.

Quote: DRich

Wow, I had no idea it was that high a peso to dollar ratio now. Wasn't it also very high around 2000 or so?

From 1954-1976, the Official Rate of Mexican Peso was set at Mex$12.50 per U.S. Dollar. The 500 and 1000 peso banknotes were issued in 1931. So up until 1976 the largest banknotes were worth US$40 and US$80.

Once the fixed rate was lost 5,000-peso notes were introduced in 1981, followed by 2,000 pesos in 1983, 20,000 pesos in 1985, 50,000 pesos in 1986 and 100,000 pesos in 1988. By 1992 the 100,000 peso note was worth less than US$35 and Mexican peso was one of the most inflation ravaged currencies in the world.

Starting in 1993 three zeros were dropped from the currency and the New Peso was printed with the same banknote design.
In October 1994, Series C was issued with brand new designs. The word "nuevos" remained and 500 nuevos pesos banknote was issued.

On November 15, 2004 the 1000 pesos banknote was issued, but it is still very rare even today. The Bank of Mexico is circulating roughly a trillion pesos in banknotes and coins. But they are circulating only 81 million 1000 peso notes, which is not many for a population of 125 million. In contrast there are 1.44 billion 500 peso banknotes in circulation (over 60% of the currency by value in circulation). You are not likely to ever see a 1000 peso banknote. So for all practical matters the biggest Mexican banknote is once again worth less than US$35.

From Oct 1,1998 to Sep 30, 2008 the exchange rate changed from 9.9950 to 10.3009 pesos per dollar. Vicente Fox was president from 2000–2006 and he is one of the few modern day Presidents who did not suffer severe devaluation of the peso during his term.

PESO TO DOLLAR AVERAGE EXCHANGE RATE
Jul 1, 2015 - Sep 30, 2015 16.4088
Apr 1, 2015 - Jun 30, 2015 15.3098
Jan 1, 2015 - Mar 31, 2015 14.9441
Oct 1, 2014 - Dec 31, 2014 13.8671
Jul 1, 2014 - Sep 30, 2014 13.1082
Apr 1, 2014 - Jun 30, 2014 12.9879
Jan 1, 2014 - Mar 31, 2014 13.2257
Oct 1, 2013 - Dec 31, 2013 13.0129
Jul 1, 2013 - Sep 30, 2013 12.8994
Apr 1, 2013 - Jun 30, 2013 12.4600
Jan 1, 2013 - Mar 31, 2013 12.6394
Oct 1, 2012 - Dec 31, 2012 12.9392: Presidente Enrique Peña Nieto begins term 1 Dec 2012
Jul 1, 2012 - Sep 30, 2012 13.1539
Apr 1, 2012 - Jun 30, 2012 13.5138
Jan 1, 2012 - Mar 31, 2012 12.9846
Oct 1, 2011 - Dec 31, 2011 13.6265
Jul 1, 2011 - Sep 30, 2011 12.2612
Apr 1, 2011 - Jun 30, 2011 11.7095
Jan 1, 2011 - Mar 31, 2011 12.0604
Oct 1, 2010 - Dec 31, 2010 12.3739
Jul 1, 2010 - Sep 30, 2010 12.7963
Apr 1, 2010 - Jun 30, 2010 12.5544
Jan 1, 2010 - Mar 31, 2010 12.7783
Oct 1, 2009 - Dec 31, 2009 13.0591
Jul 1, 2009 - Sep 30, 2009 13.2422
Apr 1, 2009 - Jun 30, 2009 13.3171
Jan 1, 2009 - Mar 31, 2009 14.3379
Oct 1, 2008 - Dec 31, 2008 12.9957
Jul 1, 2008 - Sep 30, 2008 10.3009
Apr 1, 2008 - Jun 30, 2008 10.4230
Jan 1, 2008 - Mar 31, 2008 10.8021
Oct 1, 2007 - Dec 31, 2007 10.8405
Jul 1, 2007 - Sep 30, 2007 10.9530
Apr 1, 2007 - Jun 30, 2007 10.8728
Jan 1, 2007 - Mar 31, 2007 11.0101
Oct 1, 2006 - Dec 31, 2006 10.8803: Presidente Calderón begins term 1 Dec 2006
Jul 1, 2006 - Sep 30, 2006 10.9436
Apr 1, 2006 - Jun 30, 2006 11.1588
Jan 1, 2006 - Mar 31, 2006 10.5797
Oct 1, 2005 - Dec 31, 2005 10.7031
Jul 1, 2005 - Sep 30, 2005 10.7057
Apr 1, 2005 - Jun 30, 2005 10.9575
Jan 1, 2005 - Mar 31, 2005 11.1619
Oct 1, 2004 - Dec 31, 2004 11.2950
Jul 1, 2004 - Sep 30, 2004 11.4234
Apr 1, 2004 - Jun 30, 2004 11.3687
Jan 1, 2004 - Mar 31, 2004 10.9792
Oct 1, 2003 - Dec 31, 2003 11.1744
Jul 1, 2003 - Sep 30, 2003 10.7030
Apr 1, 2003 - Jun 30, 2003 10.4340
Jan 1, 2003 - Mar 31, 2003 10.7901
Oct 1, 2002 - Dec 31, 2002 10.1485
Jul 1, 2002 - Sep 30, 2002 9.8743
Apr 1, 2002 - Jun 30, 2002 9.4649
Jan 1, 2002 - Mar 31, 2002 9.0943
Oct 1, 2001 - Dec 31, 2001 9.2303
Jul 1, 2001 - Sep 30, 2001 9.2240
Apr 1, 2001 - Jun 30, 2001 9.1825
Jan 1, 2001 - Mar 31, 2001 9.6851
Oct 1, 2000 - Dec 31, 2000 9.4997: Presidente Fox begins term 1 Dec 2000
Jul 1, 2000 - Sep 30, 2000 9.3526
Apr 1, 2000 - Jun 30, 2000 9.5661
Jan 1, 2000 - Mar 31, 2000 9.3948
Oct 1, 1999 - Dec 31, 1999 9.4325
Jul 1, 1999 - Sep 30, 1999 9.3585
Apr 1, 1999 - Jun 30, 1999 9.4541
Jan 1, 1999 - Mar 31, 1999 9.9348
Oct 1, 1998 - Dec 31, 1998 9.9950
Jul 1, 1998 - Sep 30, 1998 9.4727
Apr 1, 1998 - Jun 30, 1998 8.6586
Jan 1, 1998 - Mar 31, 1998 8.4198
Oct 1, 1997 - Dec 31, 1997 8.0750
Jul 1, 1997 - Sep 30, 1997 7.8086
Apr 1, 1997 - Jun 30, 1997 7.9155
Jan 1, 1997 - Mar 31, 1997 7.8581
Oct 1, 1996 - Dec 31, 1996 7.8292
Jul 1, 1996 - Sep 30, 1996 7.5565
Apr 1, 1996 - Jun 30, 1996 7.4773
Jan 1, 1996 - Mar 31, 1996 7.5094
Oct 1, 1995 - Dec 31, 1995 7.1933
Jul 1, 1995 - Sep 30, 1995 5.8150
Apr 1, 1995 - Jun 30, 1995 5.9439
Jan 1, 1995 - Mar 31, 1995 5.9418 ----- NEW PESO COLLAPSE
Oct 1, 1994 - Dec 31, 1994 3.5709: Presidente Zedillo begins term 1 Dec 1994
Jul 1, 1994 - Sep 30, 1994 3.3904
Apr 1, 1994 - Jun 30, 1994 3.3344
Jan 1, 1994 - Mar 31, 1994 3.1741
Oct 1, 1993 - Dec 31, 1993 3.1202
Jul 1, 1993 - Sep 30, 1993 3.1145
Apr 1, 1993 - Jun 30, 1993 3.1119

Carlos Salinas de Gortari was president from 1988–1994. The currency did not collapse under him, but as it lost 50% only weeks after he left office, he is normally blamed. He was also known to embezzle huge amounts of money. Currently living in self-imposed exile in Ireland, he left Mexico fearing he might be charged with the murder of his chosen successor Luis Donaldo Colosio. Carlos is extremely unpopular in Mexico where he is blamed for a decreased standard of living, economic difficulties, the rise of the drug trade and the massive corruption that occurred during his administration.

OLD PESO TO DOLLAR
December 1992 3,116.03
November 1992 3,115.93
October 1992 3,120.22
September 1992 3,088.19
August 1992 3,087.57
July 1992 3,114.53
June 1992 3,117.98
May 1992 3,099.31
April 1992 3,067.64
March 1992 3,065.96
February 1992 3,061.76
January 1992 3,067.33
December 1991 3,068.85
November 1991 3,067.21
October 1991 3,064.91
September 1991 3,052.66
August 1991 3,042.04
July 1991 3,028.04
June 1991 3,011.25
May 1991 3,003.01
April 1991 2,989.09
March 1991 2,976.36
February 1991 2,965.10
January 1991 2,954.08
December 1990 2,942.13
November 1990 2,927.60
October 1990 2,906.86
September 1990 2,888.90
August 1990 2,877.70
July 1990 2,865.69
June 1990 2,843.91
May 1990 2,820.43
April 1990 2,790.63
March 1990 2,760.46
February 1990 2,730.66
January 1990 2,700.99

Quote: Pacomartin

On November 15, 2004 the 1000 pesos banknote was issued, but it is still very rare even today.

Because people here are IDIOTS when it comes to that note.

It's hard making change for it in some purchases, granted. But this happened to me: I bought about 735 pesos worth and tried to pay with a 1,000 note. The cashier said she had no change. I gave her two 500 notes and promptly received 265 in change. The change required for a 1,000 note was <drumroll> exactly the same

In Tijuana I went to an ATM and withdrew about 400 pesos, and the machine gave it to me in 5 peso notes. I had to roll it up in a ball, and I felt like an idiot.
Other times I only get 500 peso banknotes which are difficult to spend in a small town. No kidding, I went to a small bakery in Oaxaca City in the morning, and she didn't have change for 20 a peso banknote.

But in more affluent Mexico City, I would think that a cash purchase of 700-1000 pesos would not be extremely unusual. In small cities in the USA they often refuse to take the $100 bill, but I can't imagine them doing that in NYC.

Just as a point of reference, there are about a billion US$2 bills in circulation, and you never see them. To have only 80 million thousand peso banknotes circulating in Mexico after 10 years indicates a very conservative attitude.

As I said, other cultures are also conservative. The Brits still barely accept their£50 note (1,250 pesos) outside of London and they have had it in circulation over three decades (since March 20 1981). They are much more comfortable with their £20 note (500 pesos).

Quote: Pacomartin

When the dollar gets strong like it is right now (16.7 pesos to dollar, 1 euro =$1.12. US$1=CAD$1.31) it obviously affects you if you are visiting the USA.

But I've always heard that because oil is priced in dollars, a lot of other things go up as well in other countries. The price of gasoline is obvious, but I would assume it affects underlying shipping costs.

My question is to foreign forum members, can you feel it in your day to day lives when the dollar goes up?

For the Canadian economy we are a net exporter of oil so that helps mask the costs that go up. We see it in food costs in the west because much of our produce comes up from California in the winter.

The high US dollar also keeps a lot of our cross border shoppers at home and brings more US tourists into Canada. One sector that gets hammered is professional sports teams whos players contracts are all in $US and ticket prices are in $C.

Quote: kenarman

The high US dollar also keeps a lot of our cross border shoppers at home and brings more US tourists into Canada.

Canada carries enough in foreign reserves to cover it's currency.

Official International Reserves (millions of U.S. dollars)
$47,908 U.S. dollars
$19,257 Other Foreign Currencies
$70,023.5 (31 December 2014): Bank notes in circulation (millions of CANADIAN dollars)

In theory Canada will be able to cut it's bank notes in circulation and replace them with more electronic transactions. I say "in theory" because the only country to actually cut their cash supply is Sweden.

If CAD and USD ever get back to parity, Canada could just fix it's currency at parity. It would be by far the largest economy to have a fixed currency, but it would eliminate the wide swings. But the swings help some people and hurt others.

Would you be in favor of a fixed exchange rate?

Quote: Pacomartin

Would you be in favor of a fixed exchange rate?

I don't have real strong feelings one way or the other but somehow it seems a country is giving up some of it's sovereignty when it pegs to another currency.

Although Canada has large foreign reserves the speculators of the world are strong enough to move rates the few points they need to for them to make huge profits.