tag:blogger.com,1999:blog-2289482511228853984.post2451089526908402506..comments2023-12-16T05:27:05.041-06:00Comments on mexpatriate — in the key of steve: $500 on blackSteve Cottonhttp://www.blogger.com/profile/00468378507171761868noreply@blogger.comBlogger16125tag:blogger.com,1999:blog-2289482511228853984.post-47724342377176210762011-09-28T14:45:57.337-05:002011-09-28T14:45:57.337-05:00Good point. I did not intend to sound callous. O...Good point. I did not intend to sound callous. Of course, it may have more to do with my general memory.Steve Cottonnoreply@blogger.comtag:blogger.com,1999:blog-2289482511228853984.post-72665584944609637922011-09-28T13:45:22.350-05:002011-09-28T13:45:22.350-05:00Kim: I know enough about you to know there is no ...Kim: I know enough about you to know there is no exchange rate "risk" for you. There is just the question of how rich you will be in Mexico. A lot, or a little less of a lot.<br /><br />Don't worry. Be happy.Felipe Zapatahttp://unseenmoon.wordpress.com/noreply@blogger.comtag:blogger.com,1999:blog-2289482511228853984.post-36831445633112276002011-09-28T13:43:38.001-05:002011-09-28T13:43:38.001-05:00Steve, people remember prices when cash is tight f...Steve, people remember prices when cash is tight for them. Flush people do not. You do not remember, and neither do I. We are more fortunate than many.Felipe Zapatahttp://unseenmoon.wordpress.com/noreply@blogger.comtag:blogger.com,1999:blog-2289482511228853984.post-2787156867504769212011-09-28T11:25:07.809-05:002011-09-28T11:25:07.809-05:00I am always amazed at how people remember prices i...I am always amazed at how people remember prices in stores. I could not tell you how much I paid for onions yesterday.Steve Cottonnoreply@blogger.comtag:blogger.com,1999:blog-2289482511228853984.post-14667454550173856992011-09-28T09:33:45.831-05:002011-09-28T09:33:45.831-05:00Here in Merida, whenever there is an appreciable i...Here in Merida, whenever there is an appreciable incease in the exchange rate, prices in most of the larger retail stores reflect the increase (but never the decrease) almost negating the good deal we think we are getting. Nonetheless, I've been visiting the ATM on a regular basis and stashing some of those pesos for a rainy day. Merida Mikeynoreply@blogger.comtag:blogger.com,1999:blog-2289482511228853984.post-48611714305193478252011-09-27T22:05:37.920-05:002011-09-27T22:05:37.920-05:00I am glad I bought a wad.I am glad I bought a wad.Steve Cottonnoreply@blogger.comtag:blogger.com,1999:blog-2289482511228853984.post-54065946976520373472011-09-27T20:02:39.573-05:002011-09-27T20:02:39.573-05:00Hola Don Cuevas,
LOL... living large in Mexico. ...Hola Don Cuevas,<br /><br />LOL... living large in Mexico. You go for it !!!<br /><br />Kim G<br />Boston, MA<br /><i>Where to our dismay, the peso has started to strengthen again. Or the dollar to weaken. Whatever. </i>Kim Gnoreply@blogger.comtag:blogger.com,1999:blog-2289482511228853984.post-86136844867631442192011-09-27T06:02:26.595-05:002011-09-27T06:02:26.595-05:00Seems like a very good analysis, gracias, Kim.Seems like a very good analysis, gracias, Kim.Don Cuevashttp://profiles.google.com/warshauer.michaelnoreply@blogger.comtag:blogger.com,1999:blog-2289482511228853984.post-15525154114805590362011-09-26T18:42:54.655-05:002011-09-26T18:42:54.655-05:00I think you just wrote that article. And a good o...I think you just wrote that article. And a good one it is. If I was interested in buying a house (but I am not), now would be the time to do it.Steve Cottonnoreply@blogger.comtag:blogger.com,1999:blog-2289482511228853984.post-90783268166326487332011-09-26T18:37:57.437-05:002011-09-26T18:37:57.437-05:00I've actually been thinking about how to manag...I've actually been thinking about how to manage exchange rate risk as an expat retiree, and even thought of working up an article. <br /><br />But here are a few things to keep in mind. <br /><br />1) The peso tends to move in correlation with the U.S. economy, so if the U.S. economy is expected to be strong, the peso will strengthen, and vice-versa. Why? The USA buys 80% of Mexico's exports. So the weak peso (along with low treasury yields and a low domestic stock market) are all saying the same thing: economic weakness ahead. You can also throw in a dash of risk aversion into the mix too. Most emerging market currencies have weakened dramatically against the USD in the past six weeks -- Brazil, Argentina, Korea, Colombia -- and on. <br /><br />2) As an expat living in Mexico, you have what's called a "natural hedge." This is a fancy way of saying that you have upcoming obligations in pesos. So if you buy a lot of pesos, but then the peso weakens further, you haven't lost in the same sense as a currency trader who needs to get back to dollars has. You just keep the pesos and pay your rent, buy your groceries, etc. Yes, you could have potentially gotten an even better exchange rate, but you still got a good one, and you can use the pesos. <br /><br />3) A reasonable way to manage this risk and benefit from it is to start buying measured amounts of pesos as the exchange rate weakens. You could buy a month or two's worth of expenses for every 4% drop or something like that. Assuming the peso weakness is temporary, this will help your overall exchange rate. And unless the peso weakens forever (unlikely), you will improve your overall cost of pesos. <br /><br />4) Interest rates in Mexico are higher than in the USA. While inflation is modestly higher, it's not hugely higher. This means that with your natural hedge, you can really clean up via a combination of buying pesos cheaper, then putting them into a Mexican bank and collecting some interest too. <br /><br />Should you convert your life savings to pesos at once? Probably not. While the U.S. is a mess, and Mexico now has an independent central bank, I tend to think long term funds are still likely safer in the USA. But when the Peso exchange rate gets to multiple standard deviations weaker than its normal trading band, you could seriously think about exchanging a couple years' worth of living expenses to take advantage of the rate. <br /><br />Or, as Sr Felipe has done, buy something big like a car when the rate gets cheap. This latter point is particularly effective for big, sudden moves like what we've just seen as the retail prices of imported products will only adjust with a considerable lag. <br /><br />I've personally been toying with the idea of buying a place in DF for some time now. With the exchange rate almost 20% weaker than the highs of the summer, that's a serious discount on real estate. If only I had a place lined up to buy. <br /><br />Saludos,<br /><br />Kim G<br />Boston, MA<br /><i>Where we really envy the Canadian expats.</i>Kim Gnoreply@blogger.comtag:blogger.com,1999:blog-2289482511228853984.post-24239658019071829582011-09-26T11:55:25.659-05:002011-09-26T11:55:25.659-05:00I think the "spend when things are good"...I think the "spend when things are good" syndrome is merely part of the human condition. We feel secure, so why not spend.Steve Cottonnoreply@blogger.comtag:blogger.com,1999:blog-2289482511228853984.post-82624684934985880932011-09-26T11:53:45.675-05:002011-09-26T11:53:45.675-05:00When I lived in Laredo, under the old peso, the ex...When I lived in Laredo, under the old peso, the exchange was 8 pesos for 1 dollar -- making a peso worth about 12 cents. It is odd how we remember those calculations from 40 years ago.Steve Cottonnoreply@blogger.comtag:blogger.com,1999:blog-2289482511228853984.post-57801817368506009962011-09-26T11:51:05.503-05:002011-09-26T11:51:05.503-05:00Good point. In that sense, it could be a gain for...Good point. In that sense, it could be a gain for Mexico. But, these fluctuations always have enough variables to satisfy both the dark cloud and silver lining crowds. For me, it is a temporary boon.Steve Cottonnoreply@blogger.comtag:blogger.com,1999:blog-2289482511228853984.post-56518261285295867872011-09-26T07:06:04.080-05:002011-09-26T07:06:04.080-05:00The peso is recovering a little bit in the last fe...The peso is recovering a little bit in the last few days - it peaked at 14 to 1 for a day. I always look at the U.S. cost for 6000 pesos (the convenient high number at the ATM's (ours anyway). I think I may have caught it at the 450 or so point. The ATM's I use take .2 peso to the dollar of the exchange - in other words if they exchange rate is 14 to 1 they pay 13.8 to 1. <br /><br />That said - yes spending happens when the exchange is favorable - and it probably more in the head than the wallet.blognoreply@blogger.comtag:blogger.com,1999:blog-2289482511228853984.post-48162917843378206452011-09-26T07:02:10.511-05:002011-09-26T07:02:10.511-05:00When I moved to Mexico almost 12 years ago, the ra...When I moved to Mexico almost 12 years ago, the rate was right at 10-1. At one point, it slipped down to almost 9-1, not good. Well, for me anyway. The advantage of 10-1 is that it's simple to make comparisons. A few years back it soared to 15-1. Now those were the happy days. It's been dawdling along in the range of 11.5-1 for quite a while till, as you note, just recently. I hope it holds out at least for the rest of this week till my next pension payments arrive. <br /><br />I've been doing quite a jig lately. Alas, it's bad for Mexico, so there is that. <i>Ni modo.</i>Felipe Zapatahttp://unseenmoon.wordpress.com/noreply@blogger.comtag:blogger.com,1999:blog-2289482511228853984.post-41293371475042018832011-09-26T06:45:15.839-05:002011-09-26T06:45:15.839-05:00A fun and interesting post (as are all of yours). ...A fun and interesting post (as are all of yours). The cheaper peso should, all things being equal, boost Mexican exports to the U.S. and dampen Mexican imports. (Are all things equal in life?) Keep on bloggin!Krispykeynoreply@blogger.com