How Much Are Your Dollars Worth in Mexico?

The answer to that question lies in how and why you are changing dollars into pesos. Personally, I just use online banking from home, download money to my home town checking account, and pay myself once a week, right here in Merida, with my debit card. It doesn't take much for me to have just walking around money, so it doesn't hurt a bit. I do the same thing when it comes time to pay the bills. When you put your debit card in the ATM machine here, the only difference from back home is that your balance shows in pesos instead of dollars.

Now - if you wanted to get a little extra value for your bigger bucks - and if you have the time to play - and think you know which way the money is going to flow - you could probably come out smelling like a rose... if you understand what that exchange rate can mean to you.

Suppose you wanted to buy a house in Yucatan - and the price is $1,300,000 MXP. Suppose the exchange rate is 10.8. That's $120,370 USD. But suppose the exchange rate is 11.2... just 4/10 higher. Now your house is only $116,071 USD. ...and you begin to think about what you could do with that "extra" $4,299 USD you just "saved."

In reality, this is what actually happens today. Houses in Yucatan are now listed in USD, even though the country uses MXP as its currency. If someone sells you a house that lists for $120,000 USD when the exchange rate is 10.8, they get $1,296,000 MXP for it. If they sell you that same house when the exchange rate is 11.2, they get $1,344,000 MXP for it. They make 48,000 MXP ($4,286 USD).

So - both the buyer and the seller want to conduct business when the exchange rate is high - but... what makes the difference in who gets that windfall profit of almost $4,300 USD is whether the selling price is listed in MXP (you win) or whether the selling price is listed in dollars (they win). Most of us don't have the time, money or expertise to "play the game" - but isn't it fun to know there's actually a game going on?

If you want to know current currency conversion rate factors and see up to a 5 year history graph, you can find that on Yahoo Finance.

You also might want to try your hand at a little fantasy currency converting. If you re converting from dollars to pesos, multiply by the conversion factor. Example: Suppose the exchange rate is 11.2: $100 USD = $1,120 pesos. However, if you are converting from pesos to dollars, divide by the conversion factor. Suppose, when you come back across the border, the exchange rate is 10.8: $1,120 / 10.8 = $103.70. The very least you will learn is to vacation in Mexico when the conversion rate is high and come home when it goes below what it was when you crossed the border. You won't get rich, but there's something sort of satisfying about understanding how the exchange rate actually works.