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If you want to get a lesson in futures trading, by all means jump into currency. Hold on tight and don't get discouraged by a 50% loss. Just invest more money.

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On 8/12/2016 at 6:24 PM, carcamal said:

You can post all the references to a "devaluation" you want but you can't change the fact that the introduction of the new peso was nothing but a bookkeeping simplification. Did salaried employees suddenly find that they were being paid only 1/1000th in real terms of what they had been earning the day before?


If you had your money in the bank on Friday...  on the Monday-after devaluation,  your bank funds ... bought 1,000 X less...

If your bank account on Friday was worth $50,000 US dollars,  but was denominated in MXN pesos (as most were) ... you had $50 US dollars worth of MXN pesos the Monday following the devaluation.

$50,000 US dollars of value. ... *poof*   ... gone over the weekend due to a Mexican Govt announcement ... converted to just $50 of US value ...  was a real devaluation.

Which is why so many Mexicans rely on land ... gold ... or other real assets.




 

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57 minutes ago, snowyco said:


If you had your money in the bank on Friday...  on the Monday-after devaluation,  your bank funds ... bought 1,000 X less...

If your bank account on Friday was worth $50,000 US dollars,  but was denominated in MXN pesos (as most were) ... you had $50 US dollars worth of MXN pesos the Monday following the devaluation.

$50,000 US dollars of value. ... *poof*   ... gone over the weekend due to a Mexican Govt announcement ... converted to just $50 of US value ...  was a real devaluation.

Which is why so many Mexicans rely on land ... gold ... or other real assets.




 

It is incredible that you are saying this while claiming to have at least some idea of finance. If you had 50,000 pesos one day you had 50 new pesos the next day, with the same purchase power. 

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1 hour ago, Mainecoons said:

It is incredible you don't understand this led to a big loss of purchasing power.

Maybe this will help.

https://www.frbatlanta.org/-/media/Documents/filelegacydocs/Jwhi811.pdf

 

I understand that the new peso was adopted during a financial crisis but it did not "lead to" it or have any effect on it one way or the other. The only change was that you no longer had to put three zeros on all amounts. The peso has inflated from its dollar-pegged rate of 12.5 to one in 1976 to today's rate of about 18,500 to one, or 18.5 new pesos. The new peso continued to inflate at an even worse rate than before but until now I had never heard anyone claim that in one fell swoop depositors lost 999 out of 1,000 pesos in real value because the unit of currency changed its name.

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14 minutes ago, El Saltos said:

In 1994 the Mexican Government abandoned the fixed rate and the  Peso became a floating, free-market currency.  Its rate is determined by the world market for currencies and is not controlled by the Government.

I was in Mexico during that period and I remember talk, even in the Mexican newspapers, that although the peso in theory was already floating the government was somehow manipulating it to keep it at an artificially high rate until after the presidential election, which would be followed by more severe inflation, and it was obvious from examining prices that it was greatly overvalued. The predictions came true.

I remember people out of habit were still expressing amounts in thousands of pesos. There was a long period after the conversion that people could still exchange their old pesos for new ones at 1,000 to one, which makes nonsense of the claim that anyone was financially hurt by the adoption of the new currency. 

eta: although old peso coinage may still be legal tender, its only real value aside from collector interest is as scrap metal.

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On 8/16/2016 at 4:39 PM, El Saltos said:

In 1994 the Mexican Government abandoned the fixed rate and the  Peso became a floating, free-market currency.  Its rate is determined by the world market for currencies and is not controlled by the Government.

Yea but all governments buy and sell local and other currencies to manipulate value.  You have lots of dollars (tourism, manufacturing, oil if you are mexico)  so you sell the dollars and buy your peso back to increase value of Peso.  If Mexico had not been doing this the value of the peso would be much much worse, probably 25 or so to the dollar.  I can't think of any currency that is not manipulated by its government.  

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