It’s a common scenario lately: you go to transfer money to family or friends back home, and suddenly the $100 you’re sending over is resulting in less money for your loved ones — even though it was more valuable last week. Or, on a better note, the $100 you regularly send is suddenly giving your family more money than ever.
It’s frustrating, annoying and most of all confusing. So what’s going on with the exchange rate these days?
What’s happening?
The largest factor impacting exchange rates is the strength of the US dollar. Despite what we consistently hear about financial chaos — including inflation, rising interest rates, a possible recession and more — on a global scale, the dollar is the strongest it’s been since 2000. This is the result of the Federal Reserve implementing several measures to try and curb inflation with increased interest rates. When interest rates are high, the currency becomes stronger, as it becomes more appealing to investors who can yield a higher return.
But the dollar’s strength doesn’t have a one-size-fits-all impact on foreign currencies. Each currency is impacted by a range of factors that are unique to their location, leadership and position in the global economy. Which means if you send money to friends and family in different countries, you might notice different trends.
Here’s how the dollar is impacting a few different currencies around the world.
The Mexican Peso (MXN)
In Mexico, the exchange rate for the peso has stayed mostly flat — and has been even worse in value at times. Currently, $1 equals approximately 19 Mexican pesos. This exchange rate has been as low as 6 pesos to $1 in the 1990s, and hovered around 10-15 pesos to $1 between 2010-2015. In 2020, it spiked to nearly 25 pesos per $1. So why today, as the dollar is gaining strength, is it not buying more pesos?
With global supply routes disrupted and wars decimating cropland, countries that used to turn to Ukraine, Russia or China now need to look elsewhere for things like oil and metal — some of Mexico’s main exports. This is helping boost the Mexican economy.
So what does this mean if you’re sending money home to Mexico? Well, in short, don’t expect exchange rates to change drastically in the coming weeks. It’s all very complicated, and much of it depends on the U.S. economy. But for now, it’s business as usual. Fortunately, you can always trust Pangea to help you send more to Mexico.
Philippines
If you send money to the Philippines, you may have noticed every dollar you send is going a lot further. Currently, $1 equals around 57 Philippine pesos — near the currency’s all-time high, which was reached in 2004. But while the U.S. economy is strong, projections for the Philippines aren’t as sunny.
Because it’s an island, the Philippines imports more than it exports. It’s spending more money than it’s bringing in while battling a large food-inflation problem due to supply chain issues and rising fuel costs. It all combines to create a perfect storm in which the peso lowers in value, making essential goods more expensive.
The Euro
The euro is back to being stronger than the dollar after reaching parity for the first time in 20 years back in 2022. But with political and economic uncertainty worldwide, there’s no telling how this will play out in the months to come.
The Takeaway
Currency rates are complicated, but by paying attention to the news and keeping an eye on trends, your hard-earned dollars can go as far as possible when sending money abroad. And if you’re ever in doubt, you can trust that Pangea always offers low fees and industry leading rates, helping your loved ones get more each time you send.