Mexican Peso Datapoint of the Day

Currency conversion is so easy these days. More or less, one US dollar is worth the same as a Canadian dollar, an Australian dollar, a Swiss franc, one hundred yen, one thousand won, and half a British pound.

The latest milestone: a dollar is now worth less than ten Mexican pesos. Here’s the chart of the dollar against the peso over the past year:

Mexican Peso to US Dollar Exchange Rate Graph - Aug 13, 2007 to Aug 6, 2008

Mexico’s economy is very closely tied to that of the US, which is one reason why the peso took longer to strengthen against the dollar than many other currencies. But now the carry trade has kicked in: interest rates in Mexico are now 8% — a full 6 percentage points above Fed funds. Combine that with a steadily strengthening currency, and you’ve got an easy way to make a lot of money, at least in the short to medium term.

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