The premium, breakeven, and discount exchange rates of the Mexican peso in the El Paso retail sector

Raul Anton Munoz, University of Texas at El Paso

Abstract

This paper studies the exchange rates at which Mexican pesos are accepted by different retail sectors in El Paso, Texas. A random sample of 1,155 firms was surveyed to examine two aspects of reverse dollarization in the El Paso/Juarez border region. The first is to determine the percentage of retail businesses in El Paso that accept foreign currency in the form of Mexican pesos. The second is to calculate the effective exchange rate at which firms accept Mexican pesos. Out of 1,155 retail firms surveyed, 586 responses were obtained. The results of this investigation suggest that less than 14 percent (77/586) of retail firms in this market accept pesos. On average, Mexican pesos comprise 4.35 percent of total sales for those firms. Empirical analysis of the survey responses are completed using logit and ordinary least squares estimators. ^

Subject Area

Economics, Finance|Latin American Studies

Recommended Citation

Munoz, Raul Anton, "The premium, breakeven, and discount exchange rates of the Mexican peso in the El Paso retail sector" (2010). ETD Collection for University of Texas, El Paso. AAI1479561.
http://digitalcommons.utep.edu/dissertations/AAI1479561

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