Those affected by the El Paso border economy are holding their breath during the shaky U.S. economic recovery. If the United States falls back into another recession and the European Union remains in trouble, the local economy in El Paso, and throughout Mexico, is at extreme risk.
In the past four months, the peso has depreciated by twenty percent. Peso exchange rates have been volatile over the past few weeks, ranging from 14.25 to 18 pesos to the dollar. The economic failure of Western Europe is making border investments risky, causing a downturn in the border economies and depreciating the currency. Sergio Kurczyn, an analyst for Grupo Mexico, reported in a recent study “Review of Mexico’s Economic Situation” that instability in European financial markets will continue to put pressure on the peso.
This volatility in the money market and devaluation of the peso is hurting those who rely on stable price exchanges, generally the low-income. “Devaluations are good for people who deal in dollars, but not for those of us who receive salaries or microbusiness income in pesos,” said Gina Gutierrez, a Juarez resident. While a depreciated peso is hurting small business owners and low-income Mexicans who sell goods in pesos, it is benefiting large maquiladoras and export manufacturers who are experiencing lower costs but still sell their goods in dollars. Locals at the border are hoping that the peso will soon appreciate against the dollar once again due to increased investment, causing a boost in the border economy. While the future of the peso is uncertain, one thing economists know for sure is that the peso-dollar relationship will be one to watch in the coming months.
