What a Strong Dollar Means to Americans Living in Mexico

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When I was living and working in the United States – a time I jokingly refer to as LBM (Life Before Mexico) – I was recognized as an expert in counterfeit documents and passports. I would occasionally be invited to speak at conferences or to conduct training for individual police agencies.

I began each class or presentation by asking everyone in attendance to raise their hand if they had ever traveled outside the country. The classes varied in size from around 20 for a classroom to over 300 for the larger venues. In each case, the number of people with their hands up was less than 30%. When I excluded a quick trip to Canada or a cruise, the number dropped to less than 10%.

You might be asking yourself what that has to do with the exchange rate between the U.S. dollar (USD) and the Mexican peso (MXN). Although it doesn’t affect the actual rate, it does impact how many Americans take advantage of it – or fail to.

The fact is that most Americans don’t follow foreign exchange rates unless they are investors or planning a trip abroad. Even then, many just don’t understand the significance of the numbers they’re looking at.

Here’s an example:

A friend of mine was planning to visit us in Mexico and he asked about exchanging his U.S. dollars for pesos. I told him what the exchange rate was in our area – I believe it was about 17 MXN to 1 USD at the time—and told him to check with his bank to see if they offered a better rate.

My friend then asked, “So, my one U.S. dollar is like 17 dollars there?”

“No, it doesn’t work like that,” I responded. “If it did, I would head down to Colombia where the exchange rate is about 3000 Colombian pesos to 1 USD. Then I could buy a nice house for $100 USD.”

I was obviously joking but he got the point. He just shook his head and said, “I really don’t understand how the whole exchange thing works.”

Buying Power

It’s important to think of exchange rates in terms of relative buying power. In other words, it’s useful to compare what an item cost you in your own currency at an earlier exchange rate and what the same item costs you now.

Here is a quick example:

Less than two years ago on January 17, 2015, the exchange rate was 14.55 MXN to 1 USD. Today, the exchange rate is 20.63 MXN to 1 USD.

Let’s see how the change affects the relative cost of three items here in Mexico using the exchange rates shown above:

Mini Split Air Conditioner $5,439 MXN: Jan 2015 price $373.81 USD; current price $263.64 USD

Sofa $11,199 MXN: Jan 2015 price $769.69 USD; current price $542.85 USD

Milk $15 pesos: Jan 2015 price $1.03; current price $0.75 USD

As you can see, the savings is huge. It applies to everything that you spend money on from monthly utility bills to buying property.

Let’s Wrap This Up

Since our monthly income is in U.S. dollars, the exchange rate is very important to us and we follow it closely. Every time the dollar gets stronger, our already low monthly expenses get even lower. We take exchange rates into account when deciding whether to make large purchases or transfer money to Mexico.

If you’re an American and you’ve been waiting for the right time to invest in a property in Mexico or move here – this is it. Your dollar is at an all time high against the peso. These conditions won’t last forever, so I wouldn’t dawdle too long if I were you.

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About the Author

Q-Roo Paul
Paul Kurtzweil (Q-Roo Paul) is a former lieutenant from the Polk County Sheriff's Office in Florida. During his 25-year career, he received numerous commendations to include two of the agency's top honors: a Meritorious Service Medal and a Medal of Valor. In 2015, Paul retired and moved to Mexico with his wife. He now spends his days enjoying the Riviera Maya and blogging from the beach.

28 Comments on "What a Strong Dollar Means to Americans Living in Mexico"

  1. You are correct Paul and the exchange rate is still good as well – let’s hope this stays relevant with a new pres in house (you know how much he disregards Mexico). Did you get your friends and acquaintances to jump and purchase in Mexico?

    • I’m trying to get some friends to buy down here and they are pondering it. Their visits down are becoming more frequent anyway…lol.

  2. Hola Paul and Linda I am looking at buying a new car but have been told that I can’t till I get my temporary residence. I just have a tourist card. Do you know if a canadian can purchase a car here, I live in Quintane roo. Thanks I really have found the blog very useful.

  3. We are here and have been for 3 months, here for another 3 maybe longer, although the peso has gone down most real-estate is bought and sold in American dollars so the price is still the same but the average things you buy are cheaper. We rented a place and pay in peso so the rent and hydro has gone down for us :).

    • The prices fro real estate are often shown in dollars; however, I have seen recently that people have been able to negotiate better much better deals because the properties are based in Mexico. It all comes down to the negotiation.

    • You can also choose to only do business with people who list in pesos. My friend is in the process of buying a property now that is listed in pesos.

  4. Carolyn we are from Canada and I know people that have bought and insured a car but you have to know the right people and where to go to insure it.

  5. I agree with Joe–real estate is almost always priced in USD therefore the exchange rate does not impact that price. If it did, I would buy in a heartbeat!

    • Although prices are often shown in USD, I know from experience that you can negotiate lower rates thanks to the exchange rate since the properties are based here.

  6. It is all well and good for those of us who are paid in USD through a pension or SS living here. However there are down sides to the high exchange rate. First, prices are going up on everything including gas, LP gas, eggs, and most food items and imports as well as restaurants increasing their prices. For locals these increases are almost crippling. The minimum wage increased only .05 US this year to bring thehourly wage to 3.83 US. That means an hourly wage earned must work, for example, 141 hours to buy that sofa given as an example. It is all well and good to crow about the exchange rate being so wonderful for us expats but we must consider the impact on our local families.

  7. Teresa Schmidt | January 3, 2017 at 12:09 pm | Reply

    Though I am still here in the US my research shows that many rentals are being priced in USD at least in the Lake Chapala area. Still inexpensive in comparison to here.

  8. I take no pleasure in hearing/reading about the negative impact of the exchange rate on locals; who after all, make the area what it is. However, if it makes our dream of living there closer to reality, we’ll take it.

    • I remember when the British Pound was very strong and people were flocking to Florida from the UK to buy vacation homes. Sometimes exchange rates work out for you, sometimes they don’t. It’s important to take advantage of them when they are working out for you though.

  9. Great explanation

  10. Really enjoy reading your blog! I know absolutely nothing about exchanging USDs for pesos. If I am living in Mexico and my pension is deposited in my bank account in the US in USDs how do I get it transferred to Mexico in pesos? Thank you.

  11. Where did your YouTube videos go on your channel?

  12. Watch for it to get more volatile, just this morning a single tweet from Trump sent the exchange rate rocketing again. Predictions for 25:1 might come true.

  13. cheryl okerlund | January 3, 2017 at 4:51 pm | Reply

    What if where you live, in Mexico, rent and real estate is priced in USD? Doesn’t help much, does it?

    • That is common in areas frequented by expats but I know from experience that those prices are subject to negotiation and in most cases, they are heavily influenced by the peso (after all, this is Mexico). I have seen some savvy real estate deals in recent months.

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