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Present Condition of Mexican Peso in Relation and Comparison to the US Dollar and the World Market

The Mexican peso used to be a powerhouse currency. It was the benchmark that others had to beat, but unfortunately that time has passed. It used to be where you could not buy one dollar for a thousand pesos and that time is now gone. Experts have always maintained that the strength of a currency depends upon the current fiscal performance of the economy. To begin with, the Mexican peso has maintained a stable exchange rate in comparison with the US dollar and other big currencies in the world over the past decade. 

In recent times, it has suffered due to the increasing economic crises in the Euro zone. In order to understand the full impact of these factors for the short-term health of the Mexican peso, you have to take a lot of factors into consideration. According to Reuters, the Mexican economy is one of the strongest among the emerging economies and the Peso is among one of the most traded currencies in the world. In fact, they are the third most traded currency in the U.S.A., the most traded in Latin America, and 13th most traded in the world

Like all the other emerging economies, Mexico is largely dependent on its exports to drive the economy. It means that its economic well-being has a direct correlation to the rest of the world. It is one of the largest exporters of electronics according to prenewswire.com, nearly 25% of all the TVs produced in the world are produced in Mexico. Its total exports to the U.S.A alone are in excess of 70 billion dollars in the field of electronics.

Another sector where Mexican economy has a huge stake is in the automobile sector. Many leading auto manufacturers have their plants in Mexico. The best part is that they do not just assemble the finished products that others are bringing in crates. Rather they manufacture many of these parts locally. They also have high-end research and development facilities. All of these things augur well for long-term prospects of the Mexican economy but the problem is that it means one of the first things one cuts in an economic depression is expenses on luxury items. Unfortunately, all of these items fall in the category of luxuries.

It means that in the short term the Peso is not going to be a lucrative preposition for investors. As it is, a fact that whenever there is a weakness in the currencies people tends to invest in commodities. That is why most people are investing in commodities. Taking their investments out of currencies and investing in commodities like Gold.

Right now the conversion rate of the US dollar to peso stands at 1 dollar to 13.845 pesos. Last month it saw the high of 14.229 during the month of November. It does not mean that the Mexican peso is a losing prospect but it is advisable to stay away from currencies if you are investing in the short term. As for long term prospects the peso is a very viable option. 

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Modified:12/30/2011
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