Advertisement

Peso Gains Strength Against the Dollar

Share
Associated Press

After slipping to record lows last month, Mexico’s peso currency has gained strength in recent days against the dollar.

At midday Monday, private exchange houses in Mexico City gave 475 pesos for each dollar and demanded 485 pesos to buy one. Along the U.S.-Mexico border, some exchange houses quoted rates of 465.

Less than a month ago, the peso’s value on the free market plunged to record lows of more than 500 pesos to the dollar.

Advertisement

The free-market rate for the peso is used in tourism and for most private transactions. A second rate, regulated by the government for about 80% of commercial transactions, stood Monday at about 340 pesos to the dollar.

Some analysts interviewed about the peso’s recent rebound said they were uncertain what prompted the comeback. They had attributed the currency’s deterioration to investor worries about the economic outlook and to speculation in the peso.

“The economic situation isn’t getting any better,” said one U.S. banker in Mexico City, who spoke on condition of anonymity. Mexico’s economy is strapped with uneven growth, high inflation, a bloated government budget and a foreign debt of $96.4 billion.

‘Realistic Adjustment’

Don Shuffstall, vice president of MBank in El Paso, argued, though, that the peso’s recent recovery is “a realistic adjustment. (The peso) is not as weak as 500 at all.”

He and other analysts suggested a variety of reasons for the rebound, including fresh banking measures imposed by the government and a boost in the price of oil sold to foreign clients.

“They’re getting a little bit more control of (their) destiny,” Shuffstall said.

Over the past month, the government has restricted peso transactions by foreign banks and announced plans to allow Mexicans living near the U.S. border to open dollar accounts in Mexican banks. Dollar accounts were banned in 1982.

Advertisement
Advertisement