Money flows from the United States to Mexico and in the opposite direction regularly and in considerable volumes. In 2016, over U.S. $28.12 billion was sent as remittances from the U.S. to Mexico. More than U.S. $1.75 billion made its way from Mexico to the U.S. in the same year. Trade of goods and services between both countries exceeded U.S. $616 billion in 2017.
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The U.S. dollar came into being in 1792. In today’s world, its use as a primary currency is found in the Caribbean, El Salvador, Ecuador, two British Overseas Territories, Turks and Caicos Islands, the British Virgin Islands, and the Federated States of Micronesia. It is also used unofficially in places such as Zimbabwe, Cambodia, Myanmar, Panama, Haiti, Liberia, and Belize.
In April 2016, the U.S. dollar accounted for more than 87% of the international forex market turnover. It is the most commonly traded currency globally, and also the most preferred reserve currency. According to estimates, more than U.S. $5 trillion is traded in the forex market each day.
|Nicknames||Buck, moolah, paper, dough, dead presidents, |
bones, greenback, green
|Bank notes||$1, $2, $5, $10, $20, $50, $100|
|Coins||1c, 5c, 10c, 25c, 50c, $1|
Originally issued by Spain, the Mexican peso was named after the Spanish dollar, and it was used as legal tender until the mid 19th century. The first coins were released in 1863. While they were used until the middle of the 20th century, their gold content reduced significantly with time. The word pesos in Mexican means “weights”, and originally referred to the weights of gold and silver.
The Mexican peso served as legal tender in Canada until 1854 and in the U.S. until 1857. The U.S. dollar’s design is said to have been inspired by the peso, and upon its introduction, the U.S. dollar was at par with the Mexican peso.
The oil crisis in the 1970s caused Mexico to default on its external debt, which led to a period of currency devaluation and hyperinflation during the 1980s. The Mexican government then created a new peso, or “nuevo peso,” in 1993. The term nuevo was dropped in 1996.
In April 2016, the Mexican peso was the 11th most commonly traded currency in the world, making up for 1.9% of the international forex market turnover.
|Currency symbol||$, Mex$|
|Nicknames||Papiros, morlacos, varos, lana, |
varonil, marimba, lucas
|Bank notes||$20, $50, $100, $200, $500, $1,000|
|Coins||5c, 10c, 20c, 50c, $1, $2, $5, $10, $20|
U.S. Dollar / Mexican Peso Historical Rates
The Mexican peso was pegged to the U.S. dollar before the 1970s. It switched to a managed floating rate system soon after the oil crisis. When the Mexican government replaced the original peso with the nuevo peso in 1993, one nuevo peso valued at 1,000 old pesos. The nuevo peso maintained stability against the U.S. dollar until November 1994, when it traded at Mex$3.4410 to the dollar. By March 1995, it valued at Mex$6.7850 to the dollar.
The Mexican peso showed signs of stability again, from 1998 to 2008, hovering between Mex$8.5 to Mex$11.5 against the dollar. While the subprime crisis in the United States caused the U.S. dollar to lose value against most currencies, it still managed to rise in value against the Mexican peso. In February 2009, the peso dropped to a then low of Mex$15.2475 against the dollar. The next time the Mexican peso valued at more than Mex$15 against the dollar was in early 2015. There has been no real respite for the Mexican peso since, and it even briefly breached the Mex$20 to the dollar mark in January 2017.
USD/MXN in the last five years
|U.S. $1 =|
|1 July, 2013||Mex$12.7325|
|1 July, 2014||Mex$13.2177|
|1 July, 2015||Mex$13.2177|
|1 July, 2016||Mex$18.7525|
|1 July, 2017||Mex$17.8013|
USD/MXN in the last five months
|U.S. $1 =|
|1 March, 2018||Mex$18.1600|
|1 April, 2018||Mex$18.7135|
|1 May, 2018||Mex$19.9135|
|1 June, 2018||Mex$19.9175|
|1 July, 2018||Mex$18.6305|
What Affects USD/MXN Rates?
As is the case with the currencies of most emerging markets, investor sentiment and geopolitical conditions tend to have an effect on the value of the Mexican peso. When volatility in the international market is low, the peso typically appreciates in value, as was the case during and after the Great Recession. Different accommodative policies implemented by the Central Bank of Mexico resulted in decreased volatility and saw the peso’s value climb by around 30% against the U.S. dollar.
On the other hand, during and soon after the period that saw Donald Trump become President of the U.S., there was a spike in volatility. There was an apprehension surrounding the ratification of the NAFTA trade agreement, which saw the peso drop in value by around 20% against the dollar in as little as three months. Even before Trump entered office, his tweet threatening Toyota Motor Corp. as President-Elect quickly reversed the gain the peso had made shortly before.
In January 2017, the Central Bank of Mexico sold around U.S. $1 billion with the aim of stabilizing the peso’s value.
People who wish to send money from the U.S. to Mexico or from Mexico to the U.S. may benefit by keeping track of the prevailing USD/MXN exchange rate. In addition, you might get better exchange rates through specialist overseas money transfer companies when compared to most banks.