Fw: FNS News: Peso Crisis Slams Border
- --- On Thu, 10/9/08, fnsnews@... <fnsnews@...> wrote:
> From: fnsnews@... <fnsnews@...>
> Subject: FNS News: Peso Crisis Slams Border
> To: fns_nmsu-l@...
> Date: Thursday, October 9, 2008, 10:16 PM
> October 9, 2008
> Commerce/Economic News
> Peso Plunge Squeezes Border
> Global economic convulsions sent the value of the Mexican
> peso in relation
> to the US dollar plummeting to new lows this week. In some
> areas of the
> borderlands and in the Mexican interior, the value of the
> peso briefly
> dived from about 10 to 14 or 17 to the dollar-a drop
> comparable to or
> greater than the 1994 peso devaluation. The dramatic hit to
> the peso,
> which had been so strong against the dollar in recent
> months that talk of
> the “super peso” reemerged, will have significant
> effects on the US-Mexico
> border economy.
> For starters, Mexican money exchange houses saw business
> evaporate this
> week. “There are no retail sales,” shrugged an employee
> of a money
> exchange outlet in Nuevo Laredo, Tamaulipas. “Sales
> plunged because we do
> not have any buyers.”
> In Matamoros, Tamaulipas, the former president of the an
> association of
> money exchange outlets in the border city reported business
> was down 30
> “We know this is not exclusive to Mexico, that it is a
> world crisis,” said
> Genaro Alonso Tavera.
> The sudden shift in exchange rates began to be noticed in
> the flow of
> two-way traffic between Mexico and the United States.
> Traffic lines to the
> United States, where the price of dollars had soared, were
> visibly shorter
> at the international crossings leading from the Tamaulipas
> border cities
> of Matamoros, Reynosa and Nuevo Laredo.
> On the US side, merchants in Laredo, Texas, worried that
> Mexican customers
> who keep them in business would cut back on shopping. The
> scenario facing
> Laredo businesses is similar in other US border cities
> where Mexican
> shoppers usually keep the economy humming.
> The peso’s downturn is also bad news for private Mexican
> businesses and
> public institutions that have their debts in dollars.
> On the other hand, some Mexican border businesses could
> benefit from the
> peso plunge. Longer lines at Matamoros gasoline stations
> were already
> reported as Mexican fuel became a bigger bargain.
> Jose Luis Garcia Arenas, president of the money exchange
> branch of the
> Ciudad Juarez Chamber of Commerce, urged calm and predicted
> the exchange
> situation as well as the Mexican economy would stabilize.
> To halt the wild downward spiral in the peso’s value, the
> official Bank of
> Mexico began making more dollars available for purchase
> this week. It was
> the first time Mexico’s central bank was forced to step
> in to prop up the
> peso since 1998.
> According to Mexican economist Rogelio Ramirez, US and
> economic indicators made the peso’s slide virtually
> inevitable. “What
> changed wasn’t reality but the government’s recognition
> of reality,”
> Ramirez said.
> Despite the Bank of Mexico’s intervention, the peso
> continued showing
> weakness as the week drew near an end. On Thursday, October
> 9, banks in
> Ciudad Juarez across from El Paso, Texas, finished the day
> paying 12.29
> pesos for each dollar and selling 12.96 pesos for each
> dollar. Rates at
> money exchange outlets were slightly better for dollar
> Gerardo Esquivel, an analyst with the College of Mexico,
> said decreasing
> migrant dollar remittances and declining prices for oil,
> principal export, were likely to affect the peso for some
> “It’s possible to conclude that the Mexican peso will
> tend to stabilize in
> the near future at a level greater than it had shown in
> recent months, but
> less than the panic levels and nervousness we’ve observed
> in recent days,”
> Esquivel said.
> Sources: Norte, October 8 and 9, 2008. Articles by Antonio
> Enlineadirecta.info, October 8 and 9, 2008. Articles by
> Gaston Monge, Hugo
> Reyna and Federico Zuniga Garcia. Diario de Juarez, October
> 9, 2008.
> Univision, October 9, 2008. La Jornada, October 9, 2008.
> Articles by Juan
> Antonio Zuniga and the Notimex news agency. El Universal,
> October 9, 2008.
> Article by Gerardo Esquivel.
> Frontera NorteSur (FNS): on-line, U.S.-Mexico border news
> Center for Latin American and Border Studies New Mexico
> State University
> Las Cruces, New Mexico
> For a free electronic subscription email fnsnews@...