Tuesday, October 7, 2008

The Peso vs. The Dollar vs. The Euro

living.boondockingmexico@yahoo.com
Oh the psychology of the Mexican. We worry so much about how another country's money does and we devaluate ours accordingly. Just what is this psychology with the peso?
Imagine living in the U.S. and there are casa de cambios on every corner that sell Euros. Top that off with all the banks constantly changing the signs in their windows depending on how the stock market does in the U.S. and the dollar stabilizes, falls or rises.
If that were true, in November 2007 one Euro cost $1.42 (u.s.). Then the end of April it went up to $1.60. After that it went up and down and had settled to $1.47 (u.s.). If you look at the peso on a chart versus the dollar for the same time period, it would look identical.
So you see, the same thing is happening to the dollar in the U.S. but Americans are not constantly reminded of what their currency is worth or they don't see a measurement of it and its reflection on their economy.
If you read the news, the peso is in a downslide. Well, bad news, so is the dollar. It's all how we look at things.
Yesterday, people were at the banks talking about taking out their money and converting it to dollars. What a mistake! I am telling people, keep your money in the bank. There is no panic, a major adjustment, yes.
I really believe that if the U.S. had approved the bailout package by last Thursday night, the Asian markets wouldn't have collapsed bringing down the house. Because it was approved after or close to the close of Asian markets, people paniced and sold. Too much bickering over politics and again, it is the people who suffer.
This too will pass.

2 comments:

  1. IMHO,
    You will see future devaluing of the the dollar as the USA debt continues to rise and the endless printing of new dollars. Can't help but be devalued soon or later. No place is really totally safe right now!

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  2. I just checked the Canadian Dollar against the Peso and right now it is almost 11:1. The USA Dollar is 12:1. Last winter my dollar was worth almost 10% less. Good for the "rich" tourists, bad for the working Mexican.

    I did not get my money out of Mutual funds soon enough and so will ride out this "Perfect Storm". Luckily, i have a good Union pension that is not in the Market and will survive. Just no major "toy" purchases for a couple of years. Like you say, "This too shall pass", and hopefully will get started on November 4. Go Obama!

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