Sunday, June 16, 2024

Go, super peso, go?

The peso is doing great!

Yay?

If you’re like me and earn your money in dollars, a position that most Mexicans see as plenty enviable, you might have conflicting worries of guilt and alarm at the improving performance of the Mexican peso this year.

Gone are the days of getting 21 pesos or more for a dollar…and coming are the days of – gulp – possibly getting 17 or so. (Don’t ask me when or for how long; most of my research turned up such wildly different predictions that anything I repeated here would be ultimately untrustworthy).

All in all, it’s still a great exchange rate; when I first came to Mexico back in 2002, the peso-to-dollar rate was roughly 10-to-one. But the peso’s recent strength has come as somewhat of a surprise, and if the peso happens to get even stronger, a lot of we dollar-earning immigrants are going to have to think very hard about how to reduce our budgets to accommodate a not-insignificant reduction in our spending power.

Why is this happening? Honestly, I don’t know, and I’m certainly not the person to explain it. Whenever I try to make sense of anything in the world of finance, which is basically a collectively agreed-on imaginary concept symbolized by pieces of paper and metal coins (and digital numbers now too, I guess?), I pretty much go brain dead from boredom.

The above article cites higher remittances, increased investment and spending from foreign countries, a weakened dollar, and high official interest rates. How those things translate to currencies being “worth” more or less is not what I’m here to discuss.

My biggest question is regarding how this will affect people “on the ground” who don’t spend their days in the world of the stock market.

I’m on the ground, and can confidently say that things have gotten mighty expensive over the past couple of years, with many food items and household goods nearly doubling in price. Over the past couple of months, it’s done so simultaneously with a reduction in the number of pesos my dollars are worth. 

Though there are claims that there’s an end in sight (to inflation, anyway), I don’t think most of us are seeing it. I’m not optimistic that consumer goods will get cheaper; the best I can hope for is that prices will stop rising so quickly. That said, I’m always open to being pleasantly surprised. 

Please, finance gods? The 99% of the world could really use some mercy.

But, to me, the bottom of the article on inflation that I cited two paragraphs above says it all: “’Companies’ hesitancy to cut and/or reduce the pace of recent price increases as the economy remains resilient and cost pressures abound’ … could affect the pace at which inflation declines.”

What is inflation, I suppose, if not a feverish upward-bound tornado of prices? On the one hand, the things that companies need to make and sell their products become more expensive, and that expense is most often passed on to consumers with a shrug and an “Inflation, man — we know it’s rough, but what can we do?” 

Having shareholders absorb some of those blows in order to keep the same amount of food on families’ tables would simply not be playing the game of capitalism correctly, and they’ve got to have enough money for universe-sized bonuses for the corporate elite, after all! 

The problem, of course, is that most of us are not big, important shareholders or CEOs of giant companies. Most of us are also not getting salary or wage increases as a result of these higher prices, and few corporate decision-makers are saying, “Gosh, I guess we’d better pay our workers more now, eh?”

There’s no “rising tide lifting all boats” here; the rising tide is simply drowning some people and keeping most others treading water really, really hard.

Is this really the best we can do, economic system-wise?

None of my Mexican friends (except the person that I personally employ) have received any pay increases as a result of rising costs, and I certainly haven’t either, though admittedly, I could tread water a lot longer than most. I suspect that a slowing inflation is more the result of getting to the top limit of what people are able to pay than it is the wizardry of raising interest rates.

As already pretty freaking privileged immigrants, we are not entitled to a special exchange rate, of course; there will be no “hazard pay” to fight the effects of a weakening dollar and out-of-control inflation. Most of us are already giving ourselves special economic treatment simply by choosing to live in a place without fully embracing the reality of its employment economy (for ourselves, anyway). We’re “gaming the system” in a way; but as many of us are learning, there’s no guarantee that the system will continue to play nice with us.

Well. As any good Buddhist will tell you, the only constant out there is change.

So we’re finally facing it. This is the risk of working in a currency that’s stronger than that of the country in which you reside: there’s no guarantee the low cost of living is going to stay that way.

All Mexicans of a certain age have lived through some pretty serious depreciations of their own currency. I imagine there might be some out there who see this weakening dollar as a bit of cosmic justice, and, hey, they might not be wrong about that.

Still, most of us non-wealthy people are in the same boat. The difference for those of us who haven’t been fully participating in the Mexican economy is that the water’s coming up to the top deck where we’ve been luxuriating; we’re not used to feeling this financially nervous.

Anyway, I’ll be having some humble pie tonight for dessert — if I can find it at a good price.

Sarah DeVries is a writer and translator based in Xalapa, Veracruz. She can be reached through her website, sarahedevries.substack.com

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