Fall in Dollar Makes Mexico Attractive

With the Euro and Pound Sterling rising to record levels against the US Dollar on foreign currency markets, Mexico looks set to win tourist revenues from Americans, Canadians and Europeans, at least in the mid-term.

If you earn your money in US Dollars and are planning a vacation in Europe any time soon, expect your holiday spending to swell.   This month, the Euro has been touching record highs against the US Dollar and the British Pound has been trading comfortably above the $2 mark for some time.

Tourist exchange rates are even less favorable to travelers: this week, American visitors to Britain needed to hand-over $2.26 for every Pound Sterling they purchased at London’s airports.

Mexico’s economy is closely tied to that of the United States, so the value of Mexico’s Peso is principally aligned with the US currency on foreign exchange markets.

As a result of recent fluctuations in the currency markets, the falling Dollar and rising European currencies are making Mexico an attractive place to take a vacation.

For Americans and Canadians, their respective Dollars have significantly higher purchasing power today in Mexico than in any western European country.  And for Europeans, Mexico is particularly good value right now, as the price of the Peso against those currencies has fallen too, making Mexico considerably less expensive for people earning Euros or Pounds.

Foreign currency exchange rates are infamously hard to forecast, so how long the current trends will last is difficult to say.

For example, recent reports from Bank of America and HSBC forecast that the Pound Sterling may fall back against the US Dollar – to around $1.80 – and if this happens, Sterling will buy proportionally fewer Pesos than it does today, although Sterling’s purchasing power will continue to be much higher in Mexico than the US Dollar’s purchasing power in the UK, even at that lower level.

The weakening dollar is creating a benefit for North America’s tourism industry: it makes Canada, the US and Mexico great value for Europeans, and people living in North America may eschew Europe in favor of more affordable ‘home-continent’ vacation options.

Mexico is, once again, going to be a popular choice for Americans and Canadians in search of a vacation, and if the current exchange rates continue well into 2008 Europeans, too, will be eyeing Mexico with new favor, as their local currencies will make their flights, hotels, tours, food, drink and souvenirs (all based in US Dollars) significantly less expensive in absolute terms.

Also See:

• Blog: A Fair Exchange
• Blog: No Hay Cambio
• Mexperience Guide to Money in Mexico
• Live Currency Converter