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Currencies
MEXICAN PESO
Introduction | Overview | Structure | History | Factors affecting change in exchange rates | Daily trend of Mexican peso | Weekly trend of Mexican peso
Introduction


Peso is a term referred to the currency unit of countries including Argentina, Mexico, Chile, Colombia, Uruguay, Dominican Republic, Cuba and Philippines. The term "peso" firstly originated in Spain that meant, "weight" and later on Spain introduced a currency named peso and it was based directly to the weight of silver. One of the currencies that are counted important among the other peso currencies of the world is the Mexican peso.

Mexican peso is the national currency of Mexico and is denoted with a "$" sign officially. To differentiate with US dollar, the Mexican peso is also depicted as "Mex$". "Centavo", denoted as "¢", serves as the subunit of the currency and is equal to 1/100th of one unit of peso. The ISO 4217 regulation suggests MXN as the currency code and 484 as the numeric code of Mexican peso. Mexico had been using the currency since it got independent in 1821.

Overview


Mexican peso had been a very popular currency in the past. There was a time when the currency was used as a trade coin not only in Mexico but also across its borders in whole of North America, China and as far as South East Asia and Pacific islands. It has got some milestones attached to its name like it used the coins with distinct borders and also as a security measure, minted all the currency coins of exact weight for the first time in the history. But in the recent times, the currency’s popularity and strength has not been like it was in the previous times. Mexican peso had some hiccups in 1994 when it encountered a major crisis, popularly known Mexican peso crisis. During this time, the crawling peg that the currency had been using was removed and the currency was floated leading to a sudden devaluation in the value. Mexican peso recovered from the crisis in 1995 and it has been going good since then.

Mexico tops among the Latin American countries in context of the per capita income. The economy is based on a high private sector ownership and has a sound export sector that helped the country come out of its peculiar situation in 1990s. And with the revival of its currency from the crisis, the economy has been put on track of growth once again. Still, the country has to manage and rectify the large inequality in income that exists in the economy. Regarding the import and export limits of the currency, the import is subject to a declaration if the amount equals or stands greater than 10000 US dollars.

Structure

Mexican currency is managed and issued by the central bank of the country i.e. Bank of Mexico. It carries out the printing and minting function as well.  Mexican peso banknotes are issued in 6 denominations that are 20, 50, 100, 200, 500 and 1000 pesos. The banknotes depict portraits of important people in the history of Mexico and backside of the notes shows various important architectural structures. The portraits and structures in the current series are mentioned in the list below
  • 20-peso note - image of former president Benito Juárez on the front side and image of a sculpture of Benito Juárez erected in the Mexico City on the backside
  • 50-peso note - image of José María Morelos y Pavón on the front side and an image of aqueduct of the city of Morelia on the backside
  • 100-peso note - idealized representation of king of Texcoco, Nezahualcóyotl on the front side and on the backside there are images of Xochipilli (god of florid song) and Xihuacóatl (the fire serpent found in the Great Temple of Tenayuca)
  • 200-peso note - portrait of Juana de Asbaje on the obverse side of the banknote and the reverse side shows a scene of the façade of the temple of San Jerónimo
  • 500-peso note - portrait of general Ignacio Zaragosa on the front and view of the bells and domes of the Puebla cathedral on the backside of the note
  • 1000-peos note - image of the "father of the country", Miguel Hidalgo y Costilla on the obverse side of the note and view of the University of Guanajuato building on the reverse side of the banknote

Regarding the coinage in the currency, the coins are minted in a wide range of face values starting from 5¢ to $100. The coins are issued in as high as 11 denominations namely 5¢, 10¢, 20¢, 50¢, $1, $2, $5, $10, $20, $50 and $100. The obverse sides of all the coins have the national shield of the country engraved on them. The reverse sides of the coinage depict the face values of the respective coins. The backsides of $10 coins and above also show engraved images like the $10 coin possess image of the circle of the Sun Stone representing Tonatiuh with the fire mask, the $20 coin possess the image of the Miguel Hidalgo, the $50 coin has an image of the Hero Cadets of the Battle of Chapultepec and the $100 coin has the coat of arms of the country.

Recently, some measures have been taken for the blind and the visually challenged so that those people do not have any difficulty in recognizing the banknotes. Tactile patterns have been raised on $100, $200 and $500 banknotes such as 5 diagonal lines with a negative slope on a $100 note, small broken up square pattern on a $200 note and 4 broken horizontal lines on the $500 bank note.

History


Peso, initially termed for the eight real coins, was firstly introduced into Mexico by the Spanish. Initially it was minted using pure silver as the base component. Peso got popular from the very beginning courtesy its distinct features and innovative security measures of that time. Till 1785, it spread over almost all of the North America and gained status as the official currency system including United States. Even when the United States dollar was launched for the first time in 1792, its value was based upon peso as it was issued at par with it. Much after the introduction of dollar in United States, peso continued to be the official currency in the country i.e. till 1857. When Mexico got independent in 1821, the newly formed government continued with peso as the official currency to the country.

The first banknotes of the currency were issued in the denominations 1, 2 and 10 pesos by Emperor Iturbide in 1823. In 1863, the first issue of peso coins denominated in centavos was minted. Soon after in 1866, coins of denomination 1 peso were minted under the reign of Emperor Maximilian. In 1925, Bank of Mexico was established and with time many other issues of coins and notes were circulated. Mexican peso stayed stable during most of the 20th century and was counted among the strongest currencies in the world. In 1970, Mexico encountered an oil crisis and due to that the currency got constantly devalued until in 1993, it had to introduce a new currency with the name "Nuevo peso" and sign "N$" and exchange rate N$1 = 1000 pesos. This new currency circulated for almost three years until in 1996, the word "Nuevo" was dropped and new bank notes and coins were issued that are still in circulation today.

Factors affecting the exchange rates between two countries


The volatility in the foreign exchange rates depends upon a numerous macro economic factors that have different degrees of importance to different economies of the world. Some special and exceptional factors affecting the rates may also exist in the case of different countries. Following are shown the common factors on which the foreign exchange rate depends

  • Flow of imports and exports between the countries
  • Flow of capital between the countries
  • Relative inflation rates
  • Fluctuation limits on exchange rate imposed by the governments of the countries
  • Merchandise trade balance
  • Rate of inflation in the country
  • Flow of funds between the countries for the payment of stock and bond purchases
  • Relative growth
  • Short term and long term interest rate differentials
  • Cost of borrowings
 
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