Title
Exchange rate premia and discounts for retail purchases using Mexican pesos in El Paso, Texas
Publication Date
12-1-2011
Publication Name
Social Science Journal
Volume
48
Issue
4
First Page
612
Last Page
620
Source Full Text URL
https://doi.org/10.1016/j.soscij.2011.03.008
Document Type
Article
DOI
10.1016/j.soscij.2011.03.008
Abstract
This paper studies the exchange rates at which Mexican pesos are accepted for retail purchases in El Paso, Texas. A stratified random sample of 586 participating firms is surveyed to examine two aspects of reverse dollarization in the El Paso/Ciudad Juárez border region. The first is to determine the percentage of retail businesses in El Paso that accept foreign currency in the form of Mexican pesos. The results suggest that just over 13.1% (77/586) of all retail firms in this market accept pesos, which on average, comprise 4.35% of total sales for those firms. The second is to calculate the effective exchange rate at which firms accept Mexican pesos. We find that 68.5% of firms accepting the peso do so at a premium. We discern these two aspects further utilizing various multivariate analyses. © 2011 Western Social Science Association.