Updated March, 2018 - The exchange rate is 18.6 to the dollar.
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The movement of the Mexican peso to the dollar depends on a number of factors, the biggest plunge, when the exchange rate reached over 20 pesos to the dollar last year, the pundits determined was due to a global economic downturn causing less demand for emerging markets assets, like oil.
After that, the causes are fairly indecipherable to economic laymen, or at least they are to those from rural Oklahoma.
Looking online, I found a great deal of highly technical information about the devaluation from 30,000 feet, but nothing at the economically granular level of my grocery shopping. “Shouldn’t I be doing something?’ I wondered when the dollar was running so high.
For example, would it make more sense to buy a new car in Mexico when the exchange rate is so favorable? Would a car really cost almost a third less that in the U.S.?
Someone else floated the idea that I should move the income needed for my next six months living expenses to a Mexican bank account to lock in the exchange rate.
In what other ways would you feel the impact of the devaluation if you lived here?
I pay my rent in dollars because my landlord happens to live in San Diego, but my electric bill, which runs about 1,100 pesos a month in the summer, went from $92 U.S out of my American bank account to $65.
My grocery bill last summer, including copious amounts of wine was 2,200 pesos ($183 U.S) every two weeks. When the dollar was at its strongest, the two-week grocery bill was $131 (U.S). If I went to the best restaurant in town, my 260 peso (once $21) meal came in at $15.
Your financial strategy, however, as a expat should be to spend money like a Mexican. To do that, you need to know the Mexican value of things no matter what the exchange rate is.
You need to know what a Mexican would pay, whether it's for a bottle of wine or a house. Not knowing the Mexican value of houses is why expats often find them so hard to sell if they have to move back unexpectedly. The cost seems like such a good deal when compared to American housing, and they compound the mistake by only comparing notes with other expats about what a good price would be.
Spending like a Mexican is easy in grocery stores, restaurants and shopping malls, anywhere with prices fixed in pesos. Other times, you need to know a little about haggling (I know all about it. I just can't do it.).
One of the most refreshing things about shopping in Mexico is that the price of the item is exactly as it's posted. If you buy a shirt (or go to a hairdresser for that matter) and a price quoted or the price tag says 300 pesos, at the register you will pay 300 pesos.
In the U.S. the price tag sometimes feels like the beginning of the negotiation. Who knows how many taxes will be tacked on? Who hasn't experienced the reasonable -sounding $50 haircut that's ended up as a $85 charge on your credit card by the time you factored in tips and taxes? Ouch!
Regardless of the favorable exchange rate, you always have to be on guard for situations where you might be charged differently than the locals. Some touring companies see charging tourists more as perfectly reasonable, as a kind of “tax.” Don’t assume by the price that you’re getting the best deal just because of a favorable exchange rate.
Some vendors or cabbies will even open admit they are charging you more because of the exchange rate when the dollar is high, which doesn't make any sense. You should demand to be charged what everyone else pays (or do what I do, which is sigh and give them the extra 10 pesos.)
Let’s say you want to rent a catamaran. The quote might seem cheap but still might be 30% more than it would be for the Mexicans behind you. Tour operators frequently charge tourists more than locals. If you find that annoying, you may need an intervention.
Happily, this is where friends come in, preferably Mexican friends. Regardless of your level of Spanish, if you have a good attitude and a generous spirit, you will make Mexican friends if you live in Mexico. Even with my often ridiculous and overly ambitious Spanish skills. I frequently ask friends what they pay for things.
When I first moved here, relative strangers would stop me from paying what they thought was too much for something. I've asked Mexicans standing right next to me in department stores, "Es un buen precio?" I almost always get sincere, sympathetic counsel.
Whenever I go shopping for jewelry, I always take a Mexican girlfriend with me to keep the vendors honest (I'm a terrible haggler). Their very presence makes a big difference.
A very Mexican phrase that I just learned is “al pendiente,” which means someone is aware, alert. You need to be just as aware and alert when the dollar is high as when it is not when you are making purchases in Mexico.
If you're traveling, things to consider about the exchange rate by Travel Agent.com
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