Activity at money-changing offices on Broadway in downtown Los Angeles was fairly light Thursday, as workers and shoppers in the predominately Latino business area waited to see whether the Mexican peso would fall further after losing about a third of its value on Wednesday.
There were relatively few customers at most of the exchange houses, which cater primarily to Mexican and Central American immigrants seeking to send part of their earnings to the families they left behind. Most exchange houses were offering 2,000 to 2,100 pesos for every dollar cashed, a disadvantageous rate compared to the 2,700 pesos that some private money changers in Mexico were charging their buyers of dollars on Thursday.
Along the U.S.-Mexico border, meanwhile, some peso exchanges were swamped with Americans buying pesos for Mexican shopping sprees.
Two exchanges, Valuta and Monte de Piedad, in the San Ysidro section of San Diego, across the border from Tijuana, said they ran out of pesos early Thursday afternoon after being besieged by Americans stocking up on pesos. The high volume of transactions, however, may be due in part to today being a Mexican bank holiday, the exchanges said.
Americans shopping with dollars in border areas like Tijuana will find bargains on goods produced in Mexico because shopkeepers will not be able to raise prices as quickly as the currency has been devalued, said Nate Rubin, co-owner of Sara, a Tijuana department store that caters to tourist shoppers.
Rudy Fernandez, managing partner of the Touche Ross accounting firm's Tijuana office, said his company had expected a significant devaluation in the peso sometime before the Mexican presidential elections next year. An important near-term impact of the devaluation, he said, will be to heighten foreign manufacturers' interest in setting up maquiladoras, or manufacturing plants, in Mexico to take advantage of the diminished labor costs.
On Broadway in Los Angeles, David Arzola--who left most of his family in the Mexican province of Michoacan when he emigrated to the United States and found a job in Los Angeles as a cook--visited an exchange house Thursday to have some papers notarized. But he postponed wiring money to his family at the offered rate of 2,100 pesos to the dollar, saying that he thought the peso could go as low as 3,000 to the dollar.
'Better to Wait'
"Right now, I'm not going to send," he said. "I've been thinking about it for several days. But the peso seems to be falling further. It's not worthwhile to send, it's better to wait."
He added: "It's a crime, what has happened. They have devalued it so much that it's not good for anything."
Other immigrants were less pessimistic. "Now is a better time to send dollars because they are worth more," said Jose Sandovar, a Los Angeles resident and electrical equipment repairman who sent $30 worth of pesos to his parents in Jahualica, a town in the Mexican province of Jalisco.
"The peso may be devalued and (Mexican) prices may rise, but salaries always rise too," said Aniceto Olea, a tailor and Los Angeles resident. Not expecting the peso to fall further, he sent $300 worth of pesos to his family in Mexico City.
Exchange houses along Broadway were slow Thursday to raise their exchange rates for sending money to Mexico, discouraging some customers. Shortly before noon, for example, the Central de Cambios y Servicios Mexico at the southeast corner of Broadway and Fourth Street raised the purchase price of a U.S. dollar from 2,200 pesos to 2,700 pesos. On the other hand, customers buying the Mexican peso were receiving just 2,000 for every dollar, and that figure sank to 1,700 later in the day.
While the Central stayed fairly busy, a nearby office of Associated Foreign Exchange Inc. was deserted. Just three customers had come in by mid-morning, compared to 15 on a typical Thursday morning. None of the customers changed more than $100, supervisor Claudio J. Sande said.
"People are waiting to see what minimum point it reaches," he said. The peso's recent wild fluctuations made it difficult to establish a rate for the public, he added. "It's difficult to know at what level to exchange. You just don't know."
Some customers of money changers said they had no choice but to buy pesos anyway. Virginia Zepeda said she did not know whether the peso would go up or down in the near future but had to send $100 immediately to her sister in Guadalajara in any case. The sister's husband, a baker, was disabled with a back injury, and the sister's son, the manager of four department stores, had just died.
"When I stayed with her and her son, she helped me," explained Zepeda, a housekeeper with three children, as she filled out a form at the Central de Cambios y Servicios Mexico.
The most immediate impact of the peso's fall probably will be felt among merchants who sell to tourists from Mexico. Manuel Serrano, a Los Angeles resident and jeweler at Broadway Jewelry Plaza, said he expected virtually no buyers from Tijuana this weekend. Such customers usually account for about a fifth of Serrano's sales.
"To start with, it's almost impossible for them to obtain dollars. . . . The bad part is that the biggest sales season of the year is Christmas," he said. Serrano estimated that the peso's fall on Wednesday could hurt his sales through next February.
Keith Bradsher reported from Los Angeles and Chris Kraul from San Diego.