Taking a Tumble

The Mexican peso fell to a new low Wednesday of 7.8 to the dollar. In December, 1994, it was 3.4, and it has been falling since the Mexican government devalued it on Dec. 20.

A Lower Peso:

* Makes Mexican exports cheaper to foreign buyers. It especially helps Mexican farm products and natural resources at the expense of U.S. crops and raw materials.

* Makes U.S. exports to Mexico more expensive. Sales in Mexico of U.S.-made cars, computers and consumer products have declined precipitously.

* Makes some vacations in Mexico less expensive to U.S. tourists because their spending power is increased. However, many prime tourist destinations raise their prices in sync with the dollar’s added value.

* Makes manufacturing in maquiladoras (foreign-owned border plants) cheaper. Many U.S. and Japanese plant owners are expanding their Mexican facilities.

* Makes it difficult for Mexicans who live along the border to shop on the U.S. side because their pesos aren’t worth as much. Many U.S. retailers in border communities have suffered as a result.

* Makes life tougher for Mexican residents of border cities such as Tijuana, who are compensated in pesos but often pay dollar-based prices for rent, gasoline and groceries.

The Last Three Weeks

Daily closes, pesos per dollar:

Nov. 8: 7.8

Sources: Bloomberg Business News, Times and wire reports