$500 peso Mexico Note

$500 peso Mexico Note

The trend continues. Over the past year the Mexican peso has been falling. A year ago, January 2015, the peso stood at around 14.9 to the US dollar and on January 16, 2016 it was around 18.4 pesos to the US dollar.

An unstable Mexico, politically and economically, obviously benefits the United States. According to Dr. Tony Payan, director of the Mexican Center at the Baker Institute, notes that currencies rise and fall due to supply and demand. Two big factors that affect the peso are oil markets and inflation. A peso devaluation likely means that capital is currently leaving Mexico. So now may be the time to invest in Mexico.

The falling peso may be attributed to the global rise of the US dollar. This combined with the fact that Banco de Mexico has not raised interest rates because it is satisfied with the current level of inflation and Mexico’s growth rate is too low because the government has not spent any money on infrastructure programs and the current low price of oil. These all affect the exchange rate.

Crude oil prices resumed their slide during the last week of January 2016, falling more than four percent because Iraq flooded a heavily over supplied oil market with record output. Mexico’s peso has shed around eight percent in January 2016 and is heading for its worst monthly loss against the dollar since May 2012.

With the Mexican peso so weak this makes a Mexican vacation extremely affordable for US travelers. Many visitors are reveling in what they receive and the cost, especially eating at really great restaurants.

Andreas Rupprechter, owner of Kaiser Maximilian Restaurant in Puerto Vallarta says his clients can enjoy an exquisite meal for about $15 to $20 US dollars. “It would be difficult to raise my prices to accommodate the current US dollar to peso exchange rate,” says Andreas, “I also have to consider Canadian tourists, too, and their dollar to the peso rate is much lower than the American rate.” Kaiser Maximilian is a high end restaurant and has won many awards for its cuisine.

United States expats living in Banderas Bay can also enjoy the great exchange rate if they are making purchases with their US credit cards, especially big ticket items like household appliances.

These same bargains can be seen in hotel, entertainment and real estate costs.