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Fw: FNS News: Peso Crisis Slams Border

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  • Greg Cannon
    Message 1 of 1 , Oct 9, 2008
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      --- 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
      > percent.
      >
      > “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
      > international
      > 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
      > seekers.
      >
      > Gerardo Esquivel, an analyst with the College of Mexico,
      > said decreasing
      > migrant dollar remittances and declining prices for oil,
      > Mexico’s
      > principal export, were likely to affect the peso for some
      > time.
      >
      > “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
      > Rebolledo.
      > 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@...
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