Saturday, July 26, 2008

Exchange Rate and Tortas

There is a little torta place just around the corner from us on Orizaba. Sometimes Ned stops in and buys us a couple for lunch. This is the ham and cheese torta sitting on a dinner plate. It is a big torta and it sells for 16 pesos. With the dollars we exchanged last week this torta would cost us $1.58 in dollars. Today with the exchange rate at 9.87, this torta costs us $1.62 in dollars.

If you live in the USA, you are probably thinking that wish you could find a sandwich anywhere for those prices. But what if we were buying a $16,000 peso refrigerator here. We would be paying $1,620 of our dollars for it today instead of $1,580 we would have paid last week. It starts to add up.....especially if this trend continues....which it most likely will while the USA economy is in a slump, slowdown, recession, depression or whatever your political persuasion calls the current situation.

By the way, these are great Tortas.


Steve Cotton said...

The current slow down in economic growth probably has very little to do with the weakness of the dollar. But two of the factors driving the slow down (the budget deficit and the trade deficit) do. Both have caused foreign investment to decline -- not to mention the xenophobic fears of the American public that has scared away foreign investment. There are plenty of other factors that weaken the dollar, but the twin deficits will continue to be major drivers -- especially since neither political party has shown any serious interest in reducing either one.

Jonna said...

Boy does this hit home for us! I am grateful for every single thing I've already bought for this house and mad at the increase for everything I still need to buy. I try to be grateful for how much I have already bought and averaging the peso cost makes it seem better. Since we are spending large amounts right now, it is a significant increase in what this house costs.

Billie said...

Steve, the deficits and the government's attitude make me think of some kid gone wild with a credit card....ignoring that one day they will need real money to pay the piper.

Jonna, interesting that you should mention building your house. Last night at dinner we were talking about a friend here who is building a house and speculating, at even this exchange rate, how much more the house was going to cost him. I think it is going to go lower and I'm sure if you do too you are buying what you can now and/or moving money to MX so you already have it in pesos at this rate.

YayaOrchid said...

Boy! I don't know much about economics, other than that everything costs more these days, but I'll tell you what, that torta sure does look good! For under $2?!
It's still a bargain no matter what the exchange rate.

Naw, seriously...I hear ya! Sad thing is, it affects the poorest of the poor the worst.