Word: pesos
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...Latin American-or indeed any-standards, the Mexican peso has been a remarkably stable currency. Since 1954 its exchange rate has not budged from 12.5 to the dollar. Mexicans were understandably astonished, therefore, when Treasury Minister Mario Ramon Beteta suddenly appeared on their TV screens last week to announce a change. From now on, he said, the peso would float freely-in other words, its value would be determined by supply and demand...
Bankers and businessmen were not overly surprised by the news. Rumors of a peso devaluation had been in the air for months, fueled by a huge Mexican trade deficit ($3.7 billion in 1975), stubborn 15%-a-year inflation and high foreign debt ($13 billion). A devaluation was also sought by tourist operators, whose business declined 4% in 1975, owing largely to price increases that had made once cheap Mexico City as costly for Americans as many European cities. Said President Luis Echeverría Alvarez: "In the end, there will be more jobs, more production, more exports and more tourism...
Perhaps, but the peso's sharp devaluation could also do harm in Mexico. Prices of the $6.6 billion worth of consumer and capital goods that Mexico imports will rise sharply in peso terms. In the wake of Beteta's announcement, many sales clerks worked until midnight changing the price tags on merchandise. At the Puerta de Liverpool department store, for example, refrigerators went up 20% overnight, color TV sets more than 30%. To ease the burden, Echeverría has already promised raises for workers, civil servants and pensioners-a generous but inflationary move...
With the near collapse of public faith in the peso-down from 36 to the dollar a year ago to 320 last week-Argentines have devised various strategies for financial survival. To get around the government's fixed dollar exchange rate on exports, for instance, some companies arrange for inflated invoices on imports, collect excess dollars at the lower official rate, supposedly to pay the phony bills, then cash the difference on the free market. Many shopkeepers have two sets of books-one that lists transactions at official prices and is shown to government inspectors, and another with actual...
...such sanctuaries. Like many other blue-collar workers, one factory stock clerk named Victor, 56, finds that his hard-won comforts are vanishing fast. Once his family regularly dined on beefsteaks; now, he says, "we don't know what meat looks like. We eat ravioli." His 13,000 peso monthly salary is now worth only about $40. Last year his monthly salary was just 6,000 pesos, but in purchasing power it was worth...