Pesos Pouring In : Devaluation Fear Spurs Rush to U.S. to Buy Dollars
A steady stream of Mexicans poured across the border to money exchanges here Thursday to buy dollars at record high exchange rates, spurred in part by a shortage of U.S. currency at Mexican banks.
“Business is like crazy here,” said Francisco Anzar, who owns four money exchange houses in San Ysidro. “Right now people are afraid of devaluation.”
Many Mexicans, fearing the government will devalue the peso as early as next month, were buying dollars at the exchanges along San Ysidro Boulevard at the rate of 310 pesos to the dollar--nearly 65 pesos more than the official Mexican government rate.
The official exchange rate at Mexican banks Thursday was 244.04 pesos to the dollar, while a dollar would purchase 245.04 pesos. The rate at area exchange houses first topped 300 pesos to the dollar two weeks ago.
This is not the first time Mexicans have rushed to change pesos for dollars. In 1982, thousands of Mexicans scurried abroad to place their money in foreign banks after Mexico nationalized banks and devaluations sent the peso tumbling from 27 to more than 100 to the dollar in less than seven months.
Anita Conger, spokeswoman for Valuta, the largest money exchange house in San Ysidro, said demand for dollars is high all over the country. “The price of the dollar has really rocketed against the peso, not just in San Ysidro, but in New York, San Francisco, Los Angeles and all over the Texas border. In Laredo, Texas, it’s raining pesos right now.”
Conger said the scarcity of dollars in Mexico may be due to the Mexican government hoarding dollars because an interest payment on the country’s multibillion-dollar foreign debt is due at the end of the month.
“I understand some banks in Tijuana are offering dollars to costumers. But on a very limited basis,” Conger said. “Basically, the Mexican banks don’t exchange pesos for dollars, because they don’t have any.”
Raquel Bravo said she traveled to San Ysidro from her textile shop in Ensenada because banks there aren’t selling dollars. American costumers make their purchases in pesos, she said, but she needs to buy her materials on the U.S. side of the border in dollars.
Anzar said devaluation speculation creates panic. “It’s a vicious cycle. The demand for dollars is high, which drives up the price. As the price of the dollar increases, the peso’s price decreases, and that makes more people want to buy dollars,” he said.
At P&L; Currency Exchange, many of the buyers were Americans purchasing pesos, said Guadalupe Sanchez.
“I guess they want to take advantage of the exchange rate,” she said. P&L; was selling dollars for 310 pesos and willing to pay 330 pesos to buy them. Most of the exchange houses were buying dollars for between 317 to 330 pesos.
Rosalind Hare, of Florida, said she decided against buying pesos at exchange houses on the U.S. side of the border before entering Mexico.
“We asked when we got off the trolley if we should buy pesos, and they told us the merchants (in Tijuana) like to bargain,” Hare said.
Anzar is not one of those who believes the peso will be devalued. Instead, he thinks Mexican banks may attempt to stabilize the exchange rate by selling dollars for pesos at prices competitive with the money houses.