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The Mexican Peso

Basic overview of Mexican peso

The Mexican Peso is one of the oldest currencies as it is a direct descendant of the Spanish Dollar. This currency is a father of so many international currencies including the US Dollar,  Canadian Dollar and Chinese Yuan among others. It is the basic tender for economic activity in Mexico. The smallest denomination for a bank note is $10, although it is not generally available and is out of print currently. The largest denomination note is $1000. The smallest coin is 5 centavos and largest is a commemorative coin of denomination $100. Its code is MXN.

It is one of the most traded currencies in North America, third largest in US and 13th largest in the world. It is currently valued at 13.865 MXN to a US Dollar, 18.0402 MXN to a Euro and 21.6543 MXN to a British Pound. This currency is one of the favorites of Forex traders for a variety of reasons. One of the major factors is that there is over a million retirees from North American countries like U.S.A and Canada that have taken up permanent residence in Mexico. Mix it with a very stable MXN with an inflation rate of just under 5% and low interest rates. It is difficult to find a currency that is more stable and bankable in the long run. In addition, another factor that contributes to the wellbeing of the Mexican economy and Mexican Peso in particular is the fact that it is an economy that does not depend on any one sector. It has a diverse base with its ability to manufacture everything from electronics to automobiles.

This diversity in production is one of the primary reasons that, Mexico has been able to withstand economic recession that hit South America so severely in early 2000s. Again, it is one of the primary reasons that the Peso has a strong showing in future trading. However, during this past week it did not flourish that much but what else do you expect with recession finally raising its ugly head in Europe and putting almost all the major economies under pressure. It means that the peso is under pressure in the short term but that does not mean that it will remain so. Mexico has a huge international investment in the field of auto making and electronics. It also has a very stable and liquid banking system. According to experts, the Mexican economy is under performing but it is moving in the right direction. It has shown constant growth and positive growth rates. 

All of these factors mean that the Mexican Peso remains a viable investment option in the long term. As for the short-term investment scenario, it is going to lose as major economies come under pressure. Spending on luxury items is going to see a serious reduction. It will mean that the Mexican peso is going to go down against other major currencies like the US Dollar, Euros and the British Pound. On the other hand, it is not going to suffer any major adverse effects in long term. 

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Modified:12/30/2011
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