Publication Date
8-2021
Abstract
Commercial banks and currency kiosk bureaus provide exchange services throughout Ciudad Juarez, Mexico, a large metropolitan economy located on the border with the United States. This study employs newspaper data to examine how the bank and kiosk sell-buy spreads are affected by fluctuations in the total number of northbound border crossers, variations in bilateral peso per dollar exchange rate, and the yield differential between 90- day Certificados de Tesorería (Mexico CETES) and 90-day U.S. Treasury Bills. The sample is comprised of monthly frequency data from January 2009 through June 2016. Parameter estimation is carried out using a GLS ARMAX procedure. Empirical results indicate that the two sets of sell-buy spreads behave very differently from each other. Bank spreads increase as the peso weakens. Exchange bureau spreads decrease as cross-border traffic flows increase. Currency kiosk spreads tend to widen as 90-day yield gaps become larger.
Comments
Technical Report TX21-2
A revised version of this study is forthcoming in International Trade Journal.
T.M. Fullerton, Jr. and F.J. Pallares, Ciudad Juarez Sell-Buy Exchange Rate Spreads: 2009-2016, Technical Report TX21-1, El Paso, TX: University of Texas at El Paso Border Region Modeling Project.