Thursday July 02 2020

Posted by BajaInsider on November 11, 2016
  • Currency exchange - changing your dollars to pesos
    Currency exchange - changing your dollars to pesos


Since June of 2014, the pesos has been falling against the dollar, from a long time 12.5:1 exchange rate to crest a 21:1 exchange rate following the US elections in the second week of November 2016. For US travelers and retirees in Mexico, this is a boon. When exchanging dollars into pesos you are now over 20:1 and climbing. And with Mexico's inflation rate around 4% (they say), those US dollars are going a lot further on food, rent, and services. 

Here in Mexico foreign, (US made) products are much more expensive, rising with the exchange rate and commodity products like beef have risen right along with the dollar. But to a great extent, your stay in Mexico is still on sale at 30-40% off.

Also see: Know Your Mexican Peso - Mexican Paper Currency in Circulation
Identifying Genuine/Counterfeit Mexican Pesos

Even our 'expensive' gasoline seems a bargain to US travelers. For many years Mexico, being an oil producing nation, had gasoline at a fraction of the price that US consumers paid just across the border in California. But since Mexican oil is more expensive to pull out of the ground than is supported by the current world market price, our gasoline as reached its highest price ever – in pesos. But with the current price of regular at $13.98 pesos per liter and purchased the exchange rate of 20:1 yields an  actual price for those earning in dollars is just $2.64USD per gallon. A real plus for a Baja Road Trip.

Real estate, resort destinations and big tourist towns like Cabo are well savvy to the fluctuating value of the peso/dollar and tend to think in dollars when setting prices. So you might find your exchange rate savings mitigated in those purchases.

Making the Exchange is Making Money

Making your exchange from dollars to pesos is the key to maximizing your gain. Here are the best ways we have discovered to get your dollars turned into pesos.

Your bank card (ATM) an be the best option IF your bank doesn't have abusive exchange policies. Because I live in Mexico I researched several bank Visa cards to find one with a nominal international & transaction fees. Credit and debit transactions on cards usually offer an exchange rate at or near the Interbank exchange rate, plus a fee. That fee is something you should know before coming to Mexico. 

In 2015 new Mexican tax rules came into place and most stores and restaurants in tourist destination will have the ability to take your plastic payment. But tourist destinations also tend to be petty crime destinations. Check your billing online regularly to be sure your card is not being abused. With the new PIN electronic signatures, I have found it more difficult to prove a charge was not your own. Report discrepancies promptly. 

Mexican Banks Making a currency exchange in Mexican banks has become more difficult. Some banks require you to have an account to change money. My bank no longer does cash advances for non-customers. Banorte usually posts the tightest spread each side of the Interbank exchange rate (about +0.4 for buy pesos and -0.4 for buy dollars) but they are also the most slective on who they do business with.

Casa de Cambio (Exchange Houses) This all depends on local competition. Here in La Paz, there are few exchange houses and you will find their rates very close to that of the banks. But for non-account bearing travelers, there may be the only bet and the only game on Saturdays and Sundays. In a recent visit to Tijuana, Ensenada and the surrounding regions we found a widespread in the exchange rate offered, with the best rates closest to the border. I would not recommend the airport exchange houses, as they have you as a captive audience and I found both Los Cabos' and Tijuana's in-airport exchange rates insulting. 

Walmart. As much as I hate to give them a plug, their exchange rate on purchases is the best you will find and in an informal price survey we found their US made products also offered at a more competitive price than other markets.

Point of Purchase Exchange This used to be the way to go, with local merchants craving US dollars. But today it is going to get you taken to the cleaners. I have seen Pemex offering 17.5:1 when the exchange was closer to 19:1. A local auto parts store was offering 17:1 the same day... close to highway robbery.

Just for amusement, I like to include traveler's checks in this discussion and provide you one minute to stop laughing. Do they still sell them? They never were very widely accepted in Baja.

So the fall of the peso can make it a great time to come visit Baja, make a road trip of it or enjoy the hospitality of the smaller restaurants and boutique hotels. And despite the political fallout causing these wild fluctuations in the currency the welcoming hospitality of the people of the peninsula is a constant. Hope to see you soon...


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