Mexican peso

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The Mexican peso has been Mexico's official currency for more than 200 years, when it became popular across North America as a set weight of silver and so temporarily became the official currency of the United States and Canada. The peso has rebounded strongly since it collapsed in value in the early 1990s and is now on a upswing again following a downturn after the financial crisis of 2008.

Background

The peso, which means 'weight', was introduced to Mexico during the Spanish colonial rule as a tamper-proof coin that became a weight measurement of pure silver direct from the colony's mines.[1] The peso was adopted as legal tender in the U.S. in 1785 and was still an accepted currency until 1857. The first minted coin with '1 peso' stamped on it appeared in 1866, but from the turn of the century the silver content of peso coins was gradually reduced

In more recent decades the Mexican peso's value has taken two significant financial blows. The first followed a balance-of-payment crisis in 1982 after more than a decade of high government deficits and an expanding state.[2] The second followed a single 13% devaluation of its trading bands in December 1994, when the Mexican peso lost 50% of its value against the U.S. dollar by February 1995.[3]

At the currency level, Mexico's central bank, the Bank of Mexico (Banco de Mexico), is responsible for producing and circulating sufficient Mexican pesos to meet the stat'e financial obligations. The Bank of Mexico currently prints banknotes in denominations of 20, 50, 100, 200. 500 and 1,000 pesos, plus coins of 5, 10, 20 and 50 centavos and 1, 2, 5, 10 and 100 pesos.[4] The 200 peso note (top left) is a relatively new issue featuring a colonial-era writer and nun, Sor Juana Ines de la Cruz.[5]

Exchange rates

The forex rates in the table below are from August 27[6] and are intended to show intra-currency differences for the value of the Mexican peso. The first column show the rate per Mexican peso, the second shows the rate of pesos per the currency.

  • American dollar 0.077 13.025
  • Brazilian real 0.143 6.982
  • Chinese yuan 0.524 1.907
  • Indian rupee 3.754 0.266
  • Saudi riyal 0.288 3.473

Latest news

The Mexican peso value suffered badly following the 2008 global financial crisis but has been on a tear since mid-July 2009, gaining more than 7% in value on the back of a strongly performing Mexican Stock Exchange. Higher stock prices are in turn expected to drive the peso's value up further as global investors bet that the Mexican economy will soon drag itself out of recession.[7]

References

  1. The Peso. SpiritusTemporis.com.
  2. Foreign Finance and the Collapse of the Mexican Peso. Journal of Economic Issues.
  3. Liquidity, Risk, and the Collapse of the Mexican Peso: A Dynamic CGE Interpretation. Southern Economic Journal.
  4. Currently manufactured banknotes and coins. Bank of Mexico.
  5. Mexican Money - Bills and Coins in Circulation. About.com.
  6. Mexican Peso. X-rates.com.
  7. Mexican stocks, peso gain on global recovery hopes. Reuters.