US Dollar vs. Mexican Peso

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On January 1st my local Dunkin Donuts started employing a new individual. This individual sends his mother money in Mexico to help his sister pay for her education. He has noticed due to the exchange rate that each week every dollar is worth a different amount of Mexican Pesos.

The table below demonstrates how the exchange rate of US Dollars to Mexican Pesos has changed thus far this year.

usdmxntable

As you can see by this table when this individual started out the US Dollar represented around 14.7 Mexican Pesos each week. As April is coming to a close this individual is getting more bang for his buck when he sends US Dollars back home to Mexico.

Here is a clearer view of the US Dollar vs. the Mexican Peso:
usdmxn

The area of currency exchange rates are studied constantly by economists. Economists like to predict how exchange rates are impacted. If the guess is correct you can take advantage of exchange rates. For example, this individual could have held all of his money and sent it all in mid March and this week when the Mexican Peso has been stronger than at other times.

Individuals even trade on the currencies in various ways in the hopes of earning more money. In this example if his trade price was 14.80 and he sold once the Mexican Peso reached 15.50 [assuming he purchased 1,000 units] he would lose $45.16 at the current MXN/USD exchange rate. If the trade price was 15.50 and he sold once the Mexican Peso reached 14.80 [assuming 1,000 units] he would earn $47.30 at the current MXN/USD exchange rate. This means when the MXN is at a lower price you can profit from this exchange.

However, since this individual is sending US Dollars to Mexico he should wait until the MXN is higher so his family can get more out of the US Dollar.

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