Twenty to the Dollar

For a long time, the exchange rate for the Mexican peso was around 20 pesos to the U.S. dollar. Then a couple of years ago, the dollar began to decline until in April of this year one dollar would only get you 16.32 pesos.  It was not an enormous drop, but enough that I am sure that U.S. retirees living in Mexico on a fixed income noticed the difference.  

After the leftist candidate Claudia Scheinbaum won the Presidential election in June of this year, the dollar began to rise again.  Today the peso traded around 19.9 to the dollar and hit 20 to the dollar a couple times today... something we haven't seen since 2022.

   

The weakening peso is due in part to the fact that the ruling party appears to have the necessary votes be able to pass judicial "reforms"... reforms which many believe will undermine the independence of the courts.

The inflation rate in Mexico is currently at 5.57%, higher than the rate in the U.S.  A weaker peso will lead to increased inflation, especially on the prices of goods imported from the U.S.

The current slide of the peso is minor compared to other economic crises Mexico has suffered in the past.  For example, in 1983 the exchange rate was over 39,000 pesos to the dollar, and inflation was at 100%.  I remember those days when 50,000-peso bills were commonplace.  Let's hope that we don't see anything like that again.