It’s a U.S. Dollar Bargain to Come and Enjoy Mexico

The U.S. Dollar affects everything in the Riviera Maya from real price of a vacation, to the food we buy and the passionate adventures we seek. Find out how?

By Johnny C. Munknee

Recently, the U.S. Dollar against the Mexican Peso has been slightly declining from 11.55 down to 11.36 or so. In the short run, the U.S. Dollar is weakening against the Mexican Peso.

Moreover, the U.S. Dollar broke through a new benchmark to trade at a record low levels compared to the Euro this past week. That’s also a huge thing. This has been a long term trend now.

Hang in there with me.........it gets more fun......

Admittedly, for most Americans, a record low for the U.S. Dollar vs the Euro doesn't have the same sense of urgency as soaring oil prices or a dramatic move in their U.S. Stock Markets. That we can understand.

But mostly, it’s crucial to understand what that means to our economy here in the Riviera Maya – especially for those of you reading this in the U.S. and Canada who want to travel and more importantly, those who want to invest and even live here.

The value of the U.S. Dollar affects everything from the price of housing, consumer electronics, clothing, to the job market, and to whether a vacation here is more affordable and doable for foreigners – especially the major markets of the U.S.A, Canada, and the EU.

The causes of the weak U.S. Dollar are many, but economists agree on some major factors. And the general consensus is that the U.S. Dollar won't climb out of its current position of weakness in the foreseeable future.

What causes weakness?

The two factors most often pointed to are the U.S. trade deficit and the U.S. budget deficit. The United States has run a trade deficit with the rest of the world for many years. And it has funded government spending deficits by issuing debt.

In the past, the dollar could stay strong in the face of those so-called "twin deficits" as long as there were strong levels of investment in U.S. bonds and equities by overseas governments and foreign investors.

Okay, still with me. Hold on!

In the last couple of years, increases in the trade and budget gaps have outstripped the flow of foreign dollars into the U.S. Economy. Low interest rates in the United States have also slowed overseas investments in the U.S.

Bush administration officials have generally spoken out in favor of a strong dollar. But currency traders have interpreted the administration's actions -- as compared to its words -- as favoring a weaker dollar.

Besides running up the federal deficit, the administration has pushed hard for less intervention by Asian governments to keep their currencies weaker against the dollar.

If the weak dollar continues to hinder foreign investment in the United States, that could force up yields on government bonds, because higher rates would be needed to attract investors. And bond yields have a direct impact on a wide variety of interest rates paid by consumers and businesses, including mortgage rates.

The weak dollar also means many goods produced outside the U.S. with little U.S. domestic competition -- such as clothing or electronics -- could end up costing cost more to Americans. And if Americans keep buying higher-priced imports, that could lead to an even larger trade deficit, which in turn would put further pressure on the dollar.

What's more, U.S. companies that buy raw materials and parts from outside the U.S. would see costs rise in dollar terms. But if they can't raise prices for their products, that could cut into profits and perhaps, hiring too.

How does this affect me and the Riviera Maya?

Well, Americans traveling to Europe will find prices for just about everything much higher. And here in the Riviera Maya, well………..because the drop in the U.S. Dollar strength against the Mexican Peso is so subtle, well, Americans won’t even hardly notice.

In fact, for most of the last 6 years, the Mexican Peso has remained strong against the dollar. It’s just making a small adjustment down……….not nearly as drastic as the EU vs. U.S. Dollar changes.

So mostly, a U.S. person can come to the Riviera Maya and do well with their money. In general, they get approximately 11.36 pesos to each U.S. Dollar and thus can buy more than they could over the last 6 years.

Wholly Shazzam Batman, it’s a bargain for a U.S. person to come to Mexico!

And it’s really costly for a U.S. Person to go to Europe. Extremely Expensive! So here in Mexico, we remain a great choice for U.S. Citizens. Mexico, in fact, is a great place for a U.S. Citizen to visit.

As for Europeans, they really have two choices. They can go to the U.S. relatively cheaply or come to Mexico. I would say it’s a wash for Euros. Pick one. From a money standpoint, they both work.

And how bout them Canadians? Well, let me hear from you! Is coming to Mexico a bargain for you? Tell me and give me your stories and I will write a Canadian perspective. Send me an email to This email address is being protected from spam bots, you need Javascript enabled to view it

And finally, are the businessmen of the Riviera Maya noticing?

You betcha! They are assertively marketing our Riviera Maya as a world class tourist destination. The Riviera Maya is growing and peace, tranquility, and the world money markets are helping.

Peace, Love, Unity, and Positive Commerce for All

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