Do you like playing the ponies? Favor a nice game of Three-card Monte?
Then, step right up to your local Mexican ATM.
Not because there is a chance you will lose all your money (though there is that possibility at any ATM). If you are exchanging American dollars for Mexican pesos, you will always be a winner. At least, this past week.
Currencies fluctuate. I will not pretend to know all the reasons why. Even though I know a few. But it is not important to know any of them for this post.
In recent years, if you went into the bank to buy pesos with dollars, you could have received as few as 10 or as many as 15. That is a 50% difference. (Well, going up it is. Going down, it is a 33% decrease. But we do not need a lesson in arithmetic, thank you very much.)
And it can happen quickly. During this past week the peso slipped by 7% against the dollar. But that is headline stuff. Here is what it means practically.
When I first came down to Melaque, I could buy 6000 pesos and stay within my $500(US) limit. Sometime around the beginning of this year, I noticed I could only get about 5900 pesos. Then 5700 pesos. Until in mid-summer, I could get no more than 5600.
Then it happened. On the 20th of this month, the exchange rate moved far enough in favor the dollar that I could get 6000 pesos for about $458 (US). And on the 24th for $435.
It is almost enough to make me want to empty my dollar accounts to buy enough pesos for the rest of the year. Almost.
But the currency exchange rate is just like the stock market. The peso may continue to fall.
Now, that is not good for Mexico. Market analysts have predicted that Mexico will fail to meet its 4% growth rate for this year. If that happens, Mexico may need loans denominated in dollars. That will put inflationary pressures on the peso.
I have been asked several times how much it costs to live in Mexico. We will skip over the rest of my usually-sage advice to get to the one point I never fail to mention. People who retire to Mexico usually have a fixed stream of revenue. That is the nature of retirement. Any budget has to take into account the historical swings in the exchange rate.
And I usually provide a chart like this. Those peaks and valleys make budgeting difficult.
If most people are like me, we tend to simply spend more when the exchange rate is favorable and then start cutting back on tortillas when inflation and the exchange rate take a dive in the opposite direction.
My bottom line?
This is all very interesting, but I am going to be out there doing my part to keep the Mexican economy chugging along. Because even if Mexico has to be satisfied with a growth rate of 5% this year, it will probably be 3% higher than the rate north across the border.
And that is probably a very good bet.