Investing in Mexican Currency??

Question

Hello,
So we are so close to the mexican border like 20 minutes away I always see the Peso go up and donw it can go down as much as 10 and can rise as much as 12.5. Will it be a good investment maybe like 2-3k to get around 20% profit?? Do you think this will work there is something I have been noticing but dont quite understand it says COMPRA= Venta=
Basicly they will buy this price and sell this price does that just ruin the whole investment plan?? Any thoughts will be appreciated thanks and have a nice day

Answer 1

If you foresee the same price fluctuations in the future, it would be a good investment. You could make a 25% profit if you buy at 10 and sell for 12.50. Buying and selling would have its costs though too. For example, when buying you might get 9.95 and when selling 12.45. But still, you should be able to make a decent return on that. However, you are basing your findings on historical patterns and speculation, which can be very risky. Evaluate your options and you'll need to consider market timing if you decide to pursue the investment. Good luck! :)

Answer 2

What they mean by "Compra" and "Venta" is as follows:
On a recent day, the rates were 10.98 for Compra (Buy) and 11.14 for Venta (Sell). What that means is that buying 1000 pesos would cost you 1000 / 10.98 or $91.07. If you were selling 1000 pesos, you would get 1000 / 11.14 or $89.76. The difference is the currency exchange's profit margin, and that is how much the peso has to go up for you to break even.
If you really like the risk factor, try a time deposit peso account at one of the large banks in Tijuana. The up side is much higher interest rates than US banks. The down side is...well...your account is in pesos. If the peso drops, you lose money.

Answer 3

With all due respect, I think speculating in international currencies is extremely risky and best done by professionals. My brother-in-law does this for a major corporation and it is a full-time job. The potential for a 20% profit carries with it the potential for a 20% (or greater) loss.

I would focus my investments in more traditional areas -- stocks long-term, money market funds short-term, etc. They may not be as fun or sexy, but they are a much more sound foundation for long-term financial independence.

Answer 4

Test out your theory at www.oanda.com...they are a foreign exchange brokerage with a free trading simulator. If you can't make money trading the peso on the simulator, don't bother trying with real money.

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