Who BenefitsFrom a Weakening
Peso
Weakening Peso – Winners and Losers
*About Us
ENTRADA GROUP’s* latest white paper explores the issue from three viewpoints:• An economist• A Canadian manufacturer, based in Mexico• An employee
Entrada Group guides manufacturers in establishing and running their own cost-effective Mexico operations, enhancing their global competitiveness. Our turnkey system for long-term growth reduces cost and risk, giving small- and medium-sized foreign companies a production footprint in Mexico.
EconomistPerspective
Ever since Mexico’s Peso crisis of 1994,
thevalue of the Peso
against the US Dollar has
been sliding.
Weakening Peso – Winners and Losers
November 9, 2016: Donald Trump’s victory was followed by the Peso’s worst single day plunge since 1994.
13.4% Plunge
Weakening Peso – Winners and Losers
Oil’s Close Relationship: When oil fluctuates, so does the Peso. The recent plunge in oil has had a significant effect on Mexico’s currency.
Weakening Peso – Winners and Losers
Manufacturer Perspective
For manufacturers that dealwith parts and assemblies that go back and forth across the border, the movement of the Peso can
provide hedging opportunities.
Those that bear the greatest risk are manufacturers that borrow in US Dollars, make their income in Mexican Pesos and have to repay their loans in
Dollars.
Weakening Peso – Winners and Losers
- CFO of Canadian automotive supplier based in Entrada Group’s manufacturing campus in central
Mexico.
Weakening Peso – Winners and Losers
“The Peso’s recent slide has temporarily increased our competitive position. But if the devaluation continues for a prolonged period, we anticipate price pressures from our primary customers.”
EmployeePerspective
Weakening Peso – Winners and Losers
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The uncertain value of the Peso makes it difficult to plan for even the near future.
Weakening Peso – Winners and Losers
…and a weakening Peso also makes local prices higher.
Weakening Peso – Winners and Losers
To learn more about Mexican manufacturing, visit our website for a wealth of resources:
• White papers• Podcasts• Studies• Monthly Webinars