Life in San Ysidro: As Peso Declines, So Does Business

Shortly after 10 a.m., customers began lining up outside the money-exchange houses in San Ysidro. They all wanted one thing: dollars. What they had to sell were Mexican pesos. The law of supply and demand worked its magic.

“People just kept buying and buying,” said Francisco Anzar, who runs the Monte de Piedad exchange concern on San Ysidro Boulevard. “We kept putting the price up, but they kept buying . . . . It was like a panic.”

By the end of the day, the panic had largely subsided, but the value of the peso had dropped as much as 75% in the exchange houses along San Ysidro Boulevard--”Mexico’s Wall Street,” as one local businessman put it. In the morning, it took about 1,700 pesos to purchase a dollar; by nightfall, the number was closer to 3,000.

In Mexico City, they were calling it a decline in the peso of about 40%, but the streets of San Ysidro are often a more accurate barometer of the peso’s actual health.

Here, as in Mexico City, there was much discussion about the cause of the peso’s precipitous drop. Some spoke of intense speculation. Others noted recent Mexican government monetary policies. Still others cited problems in the Mexican stock market, Mexican political maneuvers. Everyone, it seems, had a source somewhere in Mexico providing “inside” tips.

The reality, of course, is that no one really knows why the peso fell. But the intense interest in the topic demonstrates just how linked San Ysidro is to Mexico and the fate of the Mexican peso.

Although it is a community within the city limits of San Diego, San Ysidro is, in many respects, a separate border town; it arguably has more in common with other border cities such as Calexico and El Paso than with the rest of San Diego. While San Diego has a diversified economy, San Ysidro and other true border cities have long relied on Mexican shoppers.

Consequently, San Ysidro’s retail outlets regularly transact business in two currencies. But on Tuesday, shop owners posted hand-lettered signs alerting customers of a change. No aceptamos pesos, the signs said. “We don’t accept pesos.” During such times, no one wants to get stuck with a load of bad currency.

Behind the signs was fear of another major “peso shock” like those during the devaluations of 1976 and 1982, which seriously undermined business throughout the U.S.-Mexico border area. Many of the current merchants lived through one or both of the most recent shocks; many others were forced out of business.

“It looks like we’re in for a lousy month,” said Javier Banuelos, co-owner of the Cali-Mex grocery store on San Ysidro Boulevard.

One of the Survivors

Cali-Mex, a family-style concern that caters almost exclusively to a Mexican clientele, is one of the survivors. However, business has remained way down from the pre-1982 boom days, when Mexican shoppers enjoyed the benefits of an overvalued peso.

“It’ll never be like that again,” said Manuel Banuelos, brother of Javier and another co-owner of Cali-Mex.

He cited some examples. A customer who used to purchase a case of soap at a time now only buys two bars. Another Mexican client used to pick up 15 gallons of milk on each visit; now he’s content with a gallon.

On Tuesday, business at Cali-Mex dropped by more than 50%, the owners said. They fear for the weekend, usually their busiest time of the week.

“This will take a toll; there’s no doubt about it,” Javier Banuelos said as he leaned over a carton of soap while customers trickled by. “That’s the way it goes at the border. But there’s no use crying; we’ve been through it before.”

Other Shops Hurting

Banuelos paused, then asked a visitor, “You want to buy a store?”

At other shops, businessmen also reported a decline in customers or said they anticipated such an outcome. “Every time the peso drops, business goes down,” noted Val Guerra, manager of the Payless shoe store on San Ysidro Boulevard.

In the afternoon, most of the Mexican citizens frequenting U.S. shops appeared to have jobs in the United States, a fact that gives them access to dollars. Thus, they weren’t particularly alarmed by the peso’s decline.

“I know that a lot of people from Mexico can no longer afford to shop here,” said Chava Lopez, a Tijuana resident who sells goods in the United States and was found loading his car with groceries. “It’s too expensive for them.”

The exchange-house business died down as the afternoon waned and the value of the peso hovered near 3,000 to the dollar. By late afternoon, the lines were nil. Francisco Anzar, for one, said he was hesitant to buy any more pesos; he decided to hold on to his remaining dollars.

“I might have lost $10,000 today,” said Anzar, who also trades in gold and other precious metals and gems.

Among the relatively few clients looking to purchase pesos in San Ysidro on Wednesday were shoppers heading to Tijuana for prospective shopping sprees. With the plummeting value of the peso, they figured to save a lot of money on Mexican goods. The shoppers felt a need to act fast, however, as Tijuana stores quickly adjust their prices to the falling value of the peso.

“You got to get in quick,” said Rich Gombes of San Diego, who was heading south with his wife on a shopping expedition. “There should be some real bargains.”

One man who wasn’t fazed by the peso’s decline was Juriel Alvarez, a Mexican citizen living in Chula Vista, who was purchasing some pesos at an exchange house.

“It doesn’t bother me,” Alvarez said, “because I don’t have any money anyway.”