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You may have heard of the US Dollar. It’s a very common global currency, used by countries from all over the world. It’s also known as the American Dollar.
The Mexican Peso (MXN) is a commonly used currency in Latin America and the Caribbean and is often referred to as the peso. In other words, when you say “Mexican Peso“, you’re referring to a currency called Pesos (both PES and MXN are pronounced with an emphatic ‘P’ sound), but when you say “American Dollar” or “US Dollar”, you’re referring to a currency called USD (both words pronounced with an ‘U’ sound).
The Mexican Peso is divided into 100 centavos, each centavo being known as ‘cuahuitl’ in Spanish. The Mexican Peso is pegged to the US Dollar at 18-to-1 in terms of value. For example: one dollar denominated in pesos buys one dollar of US Dollars for 18 pesos.
If you live in Mexico and want to buy goods and services in US Dollars, you have to convert your money into dollars first before it can be converted into pesos (and vice versa).
Banxico or Banco de Mexico is the central bank of Mexico and the issuer of the Mexican Peso currency.
MXN to USD Currency Conversion
Our free currency conversion tool can be a great way to convert Mexican Pesos to US Dollars fast. This website has a simple interface that allows you to quickly find the conversion rate you need easily, for any currency in the world.
In the past few years, the peso has lost its value against the dollar. Volatility in currency markets means that exchanging foreign currency can be fraught with peril.
For example, when I recently converted my local currency to US dollars, I hit a point where it was cheaper to convert back to Mexican Peso than it was to stay in USD and continue buying goods and services.
So when you are planning a trip or traveling abroad, it is always wise to factor conversion rates into your calculations. Most online currency exchanges would require you pay an exchange fee in addition to their commission, which is usually around 3%. That 3% adds up quickly!
Financial Connection Between Mexico and USA
The history of Mexico’s economy has always been closely linked to the United States. The economic relationship between our two countries is so intertwined that it can be difficult for one country to prosper without the other. A large percentage of goods manufactured in Mexico are exported to the US and Mexican exports make up more than half of US imports from Latin America.
Thus, when the US economy slows down, it impacts Mexico; and when Americans enjoy a healthy paycheck, Mexico benefits as well.
The United States and Mexico have a close financial connection. Millions of individuals living in the United States are sending money to their families living in Mexico, which totals billions of dollars annually. This is because many Mexicans are allowed to send up to $250 back home each month without it hurting their chances for receiving benefits from the government.
Mexico is a country that relies heavily on the United States. In many ways, Mexico is dependent on trade with America. With President Trump’s protectionist stance and his insistence of renegotiating NAFTA, Mexican exports to the US have been hurt and so has its economy. It’s likely that the financial connection between these two countries will continue to strengthen over time.
What Affects Exchange Rates in Mexico?
Global markets are constantly fluctuating, but what may seem like an ever-changing quagmire of numbers is not always as complex as it appears. Exchange rates in Mexico can be affected by many factors, including economic policies and global events.
Since the Mexican peso is pegged to the U.S. dollar, international trade or speculation can affect its value significantly.
It is estimated that the Mexican peso has been devalued by almost 40% since NAFTA went into effect in 1994. This has had a devastating effect on the country, and in particular on the average wage-earner. With wages not keeping up with inflation, it becomes increasingly difficult for Mexicans to pay their bills and put food on the table.
MXN-USD Exchange Rate History and Peak Rates
After the North American Free Trade Agreement (NAFTA) was signed on January 1st, 1994, the Mexican peso underwent a drastic devaluation as Mexico began to open its economy up to foreign competition. A new world of low-cost imports came flooding in from China and other countries, putting Mexican manufacturers out of business. The result was a loss of 2 million jobs and a dramatic increase in poverty levels.
Mexican Peso to USD exchange rates have been historically variable since the 1930s. The Mexican Peso was pegged at a value of $0.05 per peso from 1943 to 1947 and again from 1961-1973. It has had a fluctuating valuation since 1973, with a peak rate of a few U.S. dollars per Mexican Peso in 1994 and 1995. In 2015, the exchange rate peaked at 18.
The MXN-USD exchange rate history is riddled with its fair share of sudden spikes and drops. From the time it crossed the 1 index point mark in 1999 to the time it hit heights at approximately 22.5 index points in 2006, the Mexican Peso went through a roller coaster ride that few currencies experience. The biggest spike was seen after 2006 when it reached 24.8 index points following the global financial crisis.
Mexican Pesos to American Dollars
Mexican Pesos are worth more than American Dollars on the open market. A Mexican Peso is worth about $0.05 on the open market, but an American Dollar is worth about $0.0016 on the open market. The reason for this drastic difference is that American Dollars are backed by the government, while Mexican Pesos are technically not. This means that there will always be a demand for American dollars, while there are no guarantees of a demand for Mexican pesos.
