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surebought

Jul 4, 2011, 7:39 PM

Post #1 of 6 (2865 views)

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Will a strengthening Peso squeeze us like a lemon?

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In Mexico in the past you could always count on one thing: the peso constantly losing value against the dollar. You waited until the last second to pay invoices. This especially happened around the Presidential Elections. Not so, lately. Some say it has a lot to do with the price of petroleum. The deteriorating state of the US economy might be a big factor too. The problem is that if you earn money in Dollars then you are vulnerable to everything going up in price as the Peso Strengthens, except your Real Estate will lose value. The danger is that everyone is going to call you up around the 22nd of each month and say, "Can you come over and bring a Six Pack of Bohemia." That's why I only have a Nextel and I only give out the number to family. Seriously, we could all get stuck here, unable to return because food consumes our Monthly Dollar budget. Now they are talking about using Social Security to pay the interest on the War Debt to China. I guess we'll all have to get Cambios de Charactoristicas in our FM2 or 3 or whatever because we'll all have to get jobs. It might be easier that you think to get a job, because the employer won't have to enroll us in the SEGURO SOCIAL.

TedZar

Jul 5, 2011, 8:48 PM

Post #2 of 6 (2743 views)

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Re: [surebought] Will a strengthening Peso squeeze us like a lemon?

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Currencies can be a real problem.

I am, right at the moment, living in Thailand where - ten years ago when I first moved here, the baht was at 44:1. Now it is 30:1. A house at that time was about 1/3 the price something similar in the States, now it is about double or more, sometimes much more.

The mismanagement of our country (the USA) is really a sad tale. And the failure of leadership to take it by the horns and sort it out right now, is pathetic. I love my home country, but the limited thinking (or lack thereof) that goes on with our "leaders" is not inspiring confidence. Luckily, I do some business with China, so as things get worse in the States, the China business does better.

Just a rant: Instead of a 800 billion QE2, why didn't they just fund the development of hydrogen power in the States? It would have created tons of jobs, solve the high oil prices problem, would eventually stop sending billions of dollars to terrorist states and could even give the country a bit of a lead in new tech. Why not?

(This post was edited by TedZar on Jul 5, 2011, 8:53 PM)

Rolly

Jul 5, 2011, 9:49 PM

Post #3 of 6 (2730 views)

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Re: Will a strengthening Peso squeeze us like a lemon?

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Folks, feel free to fret over the exchange rate, but let's not get into USA politics.
This is not the place for that.

Rolly Pirate

E-visit me http://Rollybrook.com
On Facebook as Rolly Brook

CanuckBob

Jul 6, 2011, 6:46 AM

Post #4 of 6 (2687 views)

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Re: [surebought] Will a strengthening Peso squeeze us like a lemon?

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Besides that, the topic title should be changed to "Will weakening US dollar squeeze us like a lemon?" because that is what is actually occurring. The Peso is not strengthening. The Canadian dollar (and others) are doing fine against the Peso.

Bob
Inside Lakeside
http://lakechapalainfo.bigforumpro.com/

YucaLandia

Jul 6, 2011, 8:27 AM

Post #5 of 6 (2658 views)

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Re: [surebought] Will a strengthening Peso squeeze us like a lemon?

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It's tempting to look at just one side of the equations: higher oil prices and higher US debt, which ignores other key factors.

There are serious limits to how much the US dollar can weaken vs. the MN Peso, since Mexico's and US's economies are almost inextricably linked. Mexico's export revenues and remittances back from the States suffer whenever the US economy slows or stumbles. Excessive inflation of US consumer goods prices, due to a weakening dollar, gradually reduce the amount US consumers have to spend on Mexican imports and on Mexican vacations. Weakened Mexican exports, weakened tourist revenues, and lower remittances hit 3 of Mexico's top legal revenue sources.

Surebought's points all make sense if an ex-pat's money, assets, and income are based solely in the US, since the US government has not shown the will to get their spiraling debts under control. Ex-pats married to Mexicans (esp. Mexicans who work), and ex-pats who have invested in their new home country experience the exact opposite. (Compare the Bolsa's performance, Mex. govt. bond performance, Mex. real estate performance vs their US counterparts.) My wife and I both work and earn our $ here, we have significant assets invested in the Bolsa and in MXN real estate, so, as an ex-pat, I am living out the things I speculate about. (e.g. Is this discussion just speculation, hyperbole, andhand-wringing, or is it an opportunity to do something productive?)

To keep things in perspective: Not all ex-pats in Mexico are from the USA, so, "A Strengthening Peso" will not squeeze ex-pats uniformly: the Loonie has been stable vs. the MN peso, the Euro has strengthened, and the Pound has weakened only very slightly over the last 6 months.

Mexican bonds are among the strongest in the world right now, which means there are "local" opportunities available in your new home country, if you really are concerned about relative MN Peso/USD strengths.

What will happen to MN Peso values if (when) the PRI wins majority positions in 2012 elections? Will they open the spigots to buy votes, and empty the coffers when they are back in power?
Maybe hedge your bets by investing in resource-rich Canada?
-
Read-on MacDuff
E-visit at http://yucalandia.wordpress.com/

(This post was edited by YucaLandia on Jul 6, 2011, 8:39 AM)

panama john

Jul 6, 2011, 1:44 PM

Post #6 of 6 (2577 views)

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Re: [YucaLandia] Will a strengthening Peso squeeze us like a lemon?

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Well said! One needs to diversify to be able to contend with the economic realities in today's world.