Exchage rates

I know that the recession is getting worse in the US, and that our government is trying hard to turn things around. Imagine what a financial crisis does to a developing nation like Mexico. The exchange rate when we got here was 13.something pesos to one US dollar. Pretty nice! That meant a bottle of coke cost about 40 cents, and a taxi may cost $3-4 USD at most. In the month that we've been here, the exchange rate has only gotten better (for us). Now it's at over 15 pesos to one USD. Great, right?

Not quite. While this means that things are cheaper for me, life is getting harder and harder for Mexicans. The government is using their reserves to try to stablize the peso, and it's simply not working. If the exchange rate continues in this direction, Mexico could face a horrible economic reality: a devaluation. It could happen while I'm here, or soon after. But it seems like a devaluation is going to happen.

If the peso is devalued, the exchange rate will be set at some random number, like 6 pesos per USD. Going from 15 pesos to a USD to 6 pesos per USD will have devastating effects on every person in Mexico. Their savings will be worth 1/2 of what it is today. Yet the cost of living will remain the same. If someone had 100,000 pesos in the bank, it will only be worth 50,000. Imagine if you lost half of your savings overnight. What would you do?

Everyone is hoping that a devaluation won't happen, and personally I hope it doesn't happen until after May 10th. Suddenly having to pay twice as much for things will impact me. But on the other hand, the exchange rate can't keep getting higher. Mexico's stuck in between a rock and a hard place. Finacial crisis will impact Mexico severely. It's only a matter of time- sadly enough.

Sorry for the serious post. I just wanted to give some insight into what's really going on in Mexico. Things aren't always pretty- although I still LOVE Mexico and I may never come back to the US!