The Value of the Mexican Peso Drops to $20.35 Against the U.S. Dollar

As I mentioned in an earlier post, the Coronavirus scare, among other significant world events, has created volatility in both the stock market and the value of the U.S. dollar against the Mexican peso.

As a thrifty American retiree living in Mexico, I see a volatile market as an excellent opportunity to improve my financial well-being by acquiring more stock at lower prices and moving money to Mexico when I get the most pesos for my dollar. Basically the old buy low sell high strategy.

Today, the dollar reached it’s highest point against the Mexican peso in over a year, $20.35 pesos. That is a significant change from where it was back on February 18th, $18.55 pesos.

For the average American living in the U.S., the value of the dollar against other currencies doesn’t really mean much. The prices at the store aren’t affected in the short term and life pretty much goes on as usual.

But for Americans who live abroad on income originating from the U.S., taking advantage of dramatic shifts in the exchange rate can result in a lot more of the foreign currency in their pocket — and like I said, prices don’t change in the short term in response to these changes.

Capitalizing on Volatile Currency Markets

After my last article on the subject, some readers still seemed confused how to maximize their gains through currency exchange, so I’ll explain the strategy a little more.

Let’s say you’re a retired American couple living in Mexico and your combined retirement income from the States is $2,500 USD a month.

You’ll need to convert that money into pesos at some point to pay for things in Mexico. Let’s take a look at the popular ways to do that.

Relying Solely on U.S. Banks and Credit Cards (Not Recommended)

If you keep that money in your U.S. bank account and rely on your credit and debit cards to make purchases in Mexico, then you aren’t maximizing your annual gains from shifts like this.

For example, If you go shopping at a Mexican grocery store today and pay with your credit card, it will end up costing you fewer dollars on your credit card bill but that savings is small potatoes when compared to how well you could do.

Direct Deposit to Mexican Bank in Pesos (Not Recommended)

Some retirees open Mexican bank accounts and then have their social security or other retirement payment direct deposited in that account as pesos.

I never recommend this option because you’re not controlling when your dollars are converted into pesos. Over the course of a year, you could have ended up with a lot more pesos in that account by timing your transfers to take advantage of volatile currency markets like the one we’re seeing now.

Timing Larger Transfers to Take Advantage of Exchange Rates (Recommended)

In this strategy, you’ll keep a U.S. bank account and continue to have your social security and/or retirement payments direct deposited into that account. However, you will also open a bank account at Mexican bank and that’s where you will transfer your dollars when it is to your advantage to do so, meaning you’ll get the most pesos in the end.

The basic principle is the bigger the advantage, the larger the transfer.

The retired couple in our scenario is making $2,500 USD a month. Let’s say they spend that much in Mexico each year traveling and enjoying life. That’s $30,000 USD a year. They are going to spend that much money in Mexico anyway, so why not follow the basic principle to make the same amount of money go further.

The transfer of $10,000 USD would get you a lot more pesos today than it would back on February 18th:

You can do a lot with $18,000 pesos in Mexico.

The best way to transfer through third-party companies like Transferwise and not through your bank because they typically give much lower rates.

Let’s Wrap This Up

Whenever I write an article discussing the benefits of having a Mexican bank account, someone will inevitably leave a comment that they would not recommend doing it because Mexican banks are not insured like American banks are under the FDIC.

Contrary to what some folks believe, Mexico does have an entity very similar to the FDIC that protects your funds, it’s called el Instituto para la Protección al Ahorro Bancario, or IPAB for short. The amount insured is 400,000 UDIs or around $2,584,000 pesos.

Well, that’s it for today. I have to get back to following the currency market. Hasta luego.

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About the Author

Qroo Paul
Paul Kurtzweil (Q-Roo Paul) was a deputy sheriff in Florida for 25 years before retiring at the rank of lieutenant in 2015. He and his wife moved to Mexico looking to maximize their retirement income. They later started a blog called Two Expats Mexico ( to share their experiences as well as information about the logistical and legal aspects of retiring south of the border.

50 Comments on "The Value of the Mexican Peso Drops to $20.35 Against the U.S. Dollar"

  1. Ilona saunders | March 6, 2020 at 9:47 am | Reply

    Remember, everything over 10k in a foreign country needs to be reported at years end to the IRS. No biggie just a nuisance and worth mentioning.

  2. Great post Paul! Thanks for the clarity.

  3. Your analysis and recommendation is spot on. However, using Transferwise with more than 5,000 usd gets expensive, unless they have changed their method of charging in the last year.


    • They still use a fee based system but we haven’t found another third-party service or even a bank (even if it says there is no fee) that will give you as many pesos at the end. The banks make their money offering a lower exchange rate, and even when I factor in the Transferwise fee, I still do better with them.

      What’s you’re preferred method?

  4. The Mexican peso did not drop to 20.35 to the US$. It ROSE to the US$, My Friend!

    • The value of the peso fell, dropped or devalued against the dollar. I guess I could have made the title The Value of the Mexican Peso drops to 1 MXN = 0.049 USD but most folks don’t view currency rates from that perspective. Rather they compare against CAD, USD or EUR.

  5. Folks need to be very careful about opening a Mexican bank account. Some banks have very high service fees and little online support. Our experience with HSBC has been far from positive. The online banking only allows you to check the past three months so after some strange accounting questions we visited the bank asking for more information. Much to our shock the banker could only check for three months as well. Needing to review additional months we were told that the records would need to be ordered from Mexico City, that it would take several weeks and that there would be a service charge. Wow, we were required to pay to obtain information on our account. Reviewing the account once the records came we discovered the problem. We were charged a “service” charge on a substantial withdrawal we made to purchase a car. WHAT? A service charge to withdraw our own money? We have now closed the account with HSBC. Several friends and businesses have also experience problems with this bank and have moved accounts. So, I suggest folks double check all the terms and service charges with a bank before opening an account. Don’t assume banks function here as they do in their home country.

    • Thanks for sharing that, Bob. It is important to review the the fee schedule. In many cases, you can eliminate or reduce some of those fees by choosing a type of account that requires a higher minimum balance. It does pay to check various banks before choosing one.

    • Gerald Andres | March 6, 2020 at 2:44 pm | Reply

      We’ve been here 3 yrs now and have always used BancSantander in MX and Wells Fargo in the States. No problems. The only negative is the Max Transfer of $3000 per 30 day period per acct. If you have two accts, 1 for you, 1 for spouse, in each bank, then you can get up to $6000. I did have one advantage and that is because I am married to a Mexicana when we started the accts. But you might give them a check just to see if it works for you.

    • Gerald Andres | March 6, 2020 at 2:50 pm | Reply

      I forgot to add that we have full online access and use a mobile or PC to move money from acct to acct.

  6. I don’t have a Mexican bank account yet, but how I take advantage of these major drops in the Value of USDs, is by paying several months of Rent in advance using my Amex. I save quite a lot And also stocking up on food and other things I’m eventually going to buy anyway. I even use Amazon Mexico website to buy stuff I need priced in Pesos, so the amounts will ultimately be lower in USD when converted. At this minute the USD is holding against atthe Peso at $20.14 in comparison to about 18.50 two weeks ago.

  7. Hi Paul – always great articles. I feel that your annual budget post must be coming up in another month or thereabouts. You’ve always been more than gracious in sharing so much detail; and likely why it makes this the number one resource on MX IMO. I’m wondering if this April you could share not just the fixed side of your expenses but also give us a glimpse into the total picture by putting in things like groceries, gas, repairs, entertainment, etc? Thanking you in advance.

  8. We shopped around and chose Citibanamex for our local bank account, because they had the lowest fee for receiving transfers from a US bank. However, using TransferWise we don’t get charged a fee from either bank, so we are happy with that. My spouse has had a Mexican Scotiabank account for years, but the customer service is among the worst. We do, however, log in by computer occasionally to download and save monthly statements, as it can be hard to retrieve older statements when needed.

    • Thanks for haring that. It is useful to keep copies of older statements because it can be difficult to search for any older than three months on most systems.

  9. I agree with Bob Knight on this. Among other things, Mexican banks are unreliable, offer very poor service, have little or no transparency, and have no FDIC to guard against bank failure and/or fraud and frank incompetency. For these and other hidden, and no doubt numerous, reasons opening an account in a Mexican bank is NOT a good idea. Please don’t take this as a comment about your blog, which is full of generally excellent advice. Keep up the good work, please, for which we all thank you.

    • No need to include the last statement, I wouldn’t have taken your comments to be any type of criticism. It all comes down to personal choice.

      I’ve been banking in Mexico for about five years now wand have been very pleased with the service, security and online portal. As far as FDIC protection, Mexico does have it’s own version called el Instituto para la Protección al Ahorro Bancario, or IPAB for short. The amount insured is 400,000 UDIs or around $2,584,000 pesos. That’s roughly $130,000 USD.

      Having an account has made it possible for us to substantially stretch our U.S. income here in Mexico and made it much easier to pay for goods and services. For example, I currently have carpenters doing quite a bit of work in our condo and they don’t accept credit cards. Instead of having to go to the bank and take out a substantial amount of cash — always a bad idea in Mexico, safetywise — I can simply pay them through the banking app. I can transfer money directly into their account, even if it’s a different Mexican bank, or set it up so they can get the money out of an ATM themselves using a special code number.

      • We are about to start a major house reno project and I would like to use a banking app to pay the contractors, instead of needing to get large sums of cash to do so each week. Can you please tell me more about the baking ap you use to do this? Is it through a specific bank? Is there a resource you can point me towards to learn more about how to do this type of payment process with workers (direct to their bank or the atm atm code you mentioned)? This seems like a fantastic solution, thank you!

        • We make the transfers through our Mexican banking app. In Mexico, they have a system in place that makes it fairly easy to make transfer to other people who have Mexican bank accounts. We use the “cardless withdrawal” feature to pay people with a code and let them withdraw their own money. The money comes out but they don’t have any other access to the account or even see the balance. BBVA has it and I see that Santander just started it too:

          I prefer the transfer method but this is an available option if the person does not have a bank account and the amount is less than $8,000 pesos.

  10. Hi Paul my wife and are permanent residents in Cozumel we have a US Santander account and have been drawing pesos from the ATM (as you say not recommend ) we also exchange US cash at Cibanco generally for the current exchange rate or close to it. We want to open a Mexican bank account would you suggest opening another Santander account or do you have a Bank you prefer to make the transfers from the states into any help would be greatly appreciated. We really enjoy following you and your wife on your blog it has been very informative Hope to be able to meet up one of these days at your events Thank you,

    • We’ve tried a couple of banks since we arrived. In my opinion, BBVA has the best online portal and it works well with all of the transfer services we have tried. Also, no matter where we have traveled in Mexico, we’ve never had any trouble finding one of their branches or ATMs. I really love that!

      By the way, we had a Santander account at one time but we got rid of it due to the poor online banking portal/app and even poorer customer service when I visited one of their branches.

      • Gerald Andres | March 6, 2020 at 3:01 pm | Reply

        I have found that if you go to a main branch of the bank, service sucks. Go to a small branch and they fall all over themselves to help you, especially Santander. The small ones want your acct. the mains could care less.

      • Paul,
        Great advice we will look into BBVA. On a side note Santander has really upgraded there online banking with mobile apps and a way easier user interface online we love it in the states ……..but as you know this is Mexico !!

        • I’m glad to hear that Santander has improved their online portal. Maybe we’ll give them another chance someday. 🙂

  11. Susan McCrary | March 6, 2020 at 12:19 pm | Reply

    I like the way you think! Great advice.

  12. I use transfer wise and have a CIbanco account. I was frustrated at first with the bank account but now that I have had it for years, I am ok with it. The token to access on line worries me. I get concerned one day it will not function. The bank says it’s good. What I like about CIbanco is there are hardly any lines, as compared with other banks. There is a 1-800 number you can call and speak with an English speaker to assist. I had to do this twice when my account was locked because I failed to close the session properly. The bad part of this bank is that if your account goes below 50,000 pesos you get a monthly fee of 50 pesos. I hate fees so I rarely go below. Opening the account was at least a 2 hour timetable of sitting, filling out forms, signatures, copies of documents etc. I understand all banks take a long time to open an account. Though I understand perhaps another bank might have lower minimums, I don’t want to go thru the opening account process again.

  13. Remember also when you transfer USD to your Mexican account, dollars get converted to pesos. If you let the Mexican bank convert, you’re leaving a boatload of cash on the table. It’s. ALWAYS better to have your US bank convert, and then transfer pesos, not dollars. Currently the best conversion rate I’ve seen is with Schwab.

  14. I’m told that if you are involved in some types of litigation, and I don’t which types, you might have your Mexican bank accounts frozen until the litigation is resolved.

    • If you’re involved in some type of civil litigation here in Mexico (lawsuit etc.), the court does have the authority to freeze your assets pending the outcome, if it deems it necessary.

  15. Does your bank acct in Mexico pay interest? I read that if expat residents have any interest from a Mexican bank acct, they must file a Mexican tax return (as well as if they work in Mexico, rent property in Mexico, etc.). The interest from a Mexican bank account was one test that triggered the need to file a tax return in a law firm synopsis I read, and since Mexico taxes on worldwide income, that is one reason we had no interest in opening a bank account there. Is that your understanding?

    • It’s a standard checking account and does not ear any interest, so no worries there. Also, we still keep the majority of our funds in the United States. This is just the money we use to cover expenses etc while in Mexico.

      As far as taxes are concerned, like most countries in the world, Mexico taxes on worldwide income once you are determined to be a tax resident. At least that’s how it works on paper. In reality, Mexico is a country that has difficulty collecting taxes and roughly 30% of the GDP comes businesses and people working under the table. The focus has never been on foreigners who retire here and we’ve never heard of a single case where the Mexican government has come after an expat for their tax share of their worldwide income. We also don’t know any expat retirees who file a Mexican tax return unless they operate a business here or have rental properties.

      If you’re concerned about any possible future tax implications of being labeled as a “tax resident” here in Mexico, I would recommend not applying for a temporary or permanent resident card (the reason why is right there in the name) and limiting your time in Mexico.

      • I’m trying to find my way through this tax situation right now. I earn US income from online work and transfer about $80,000 pesos per month to my Mexican bank account for living expenses. To confuse things even more, that amount is a combination of income and savings.

        It shouldn’t matter in terms of tax reporting responsibilities, but I hold Mexican citizenship as well.

        I believe that the proper process is 1) file for Mexico and pay, 2) file for US and claim foreign tax income exclusion or tax credit or just file without claiming these (depends on how you crunch the numbers). But when I hear so often how Americans don’t pay and just disregard filing here and know that my life will be complicated by hiring an accountant, collecting facturas (receipts of expenses), and probably paying MORE than I would for US, I get frustrated and question how to proceed.

  16. A little off topic, but I recently renewed my residente temporal for 3 years and my US passport in Mexico. Two months turnaround for the resident permit and 12 calendar days for the passport. The passport was approved in 2 days, the mailing time was 10 days. Thanks again for your blogs covering both procedures.

  17. Best post I’ve seen in quite a while. Thanks

  18. Great information Paul. We’ve been tracking the Peso and wish we were there; unfortunately, not for another 2 months. Also unfortunate is that we live at Ground Zero for COVID19. The first case in the U.S. being our city and the most deaths here in the Seattle area. To top things off this Friday night, I’m sick. It’s a VERY big deal here and no doubt likely to continue to affect the global economy much worse as time goes on. Conventional wisdom is to buy, but on the brink of retirement here in the States, one gets nervous as things continue to plunge and the stock market doesn’t like anything more than uncertainty, which is very prevalent.

  19. This is a good piece. There is definite financial gain, albeit narrow, to realize for expats trading the $MXN against the $US during favorable market conditions such as now when Wall Street is in rapid decline, if only temporary. BUT I would exercise caution regarding currency trade.

  20. Wayne Harstad | March 7, 2020 at 3:53 pm | Reply

    Thank you very much for the info on peso exchange. One question, how to I find a Clabe acct no.

    • The CLABE is the an 18 digit account number used in Mexico. If it is your account, the information should be available on your online portal or on your paperwork.

  21. Wayne Harstad | March 10, 2020 at 3:44 pm | Reply

    Much appreciated for the info on clabe acct no. Wayne

  22. I know one application that will help you while traveling, saving your private data and give fastest VPN. This is Zorro VPN!

  23. Hi,mar 23,2020. If mex devalues the peso what happens to my dolar account and peso account.i also have a British based stock investment account should I transfer my dolars now to that account?

    • Your dollar account is unaffected because it remains in dollars. The only time you will experience a gain or loss on currency is at the time you are converting it into another currency. It’s similar to the value of your home. It can go up or down but there is no true loss or gain until you actually sell it.

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