How to protect your business’s costs when importing from Mexico
Does your company import goods or services from Mexico? Make sure that you understand how the Peso has moved relative to other global currencies and what could impact its value.
May 18, 2021 — 3 min read
Each year, billions of dollars’ worth of goods are imported from Mexico to countries around the world. In 2019, Mexico ranked 14th in the world for countries by value of their exported goods. However, the onset of the coronavirus pandemic delivered a hard hit to the Mexican Peso, causing many ups and downs throughout 2020 and into 2021.
Does your company import goods or services from Mexico? If so, make sure that you understand how the Peso has moved relative to other global currencies and what could impact its value.
What are the top products imported from Mexico?
In 2019, countries around the world imported US$472.3 billion worth of goods from Mexico. These were the top most-imported products, in order by US dollar value:
Vehicles
Electrical machinery
Machinery (including computers)
Mineral fuels (including oil)
Optical, technical, and medical apparatus
Plastics and plastic articles
Furniture, bedding, lighting, signs, and prefabricated buildings
Vegetables
Beverages, spirits, and vinegar
Fruits and nuts
Additionally, of the products listed above, 87.7% of exports from Mexico were purchased by importers In the following 12 countries:
The United States
Canada
Germany
China
Taiwan
Brazil
Japan
Colombia
The United Kingdom
South Korea
The Netherlands
Guatemala
Of these 12 countries, the United States imported the most by far; accounting for 76% of total imports.
How did the Mexican Peso perform in 2020?
As mentioned above, the two countries importing the highest value in goods from Mexico are the United States and Canada. Within the past year, both the US Dollar and the Canadian Dollar
US Dollar (USD-MXN)
Though the USD-MXN rate began 2020 on a low point—hitting its lowest of 18.5424 on February 15—it made a large leap from the end of February through the end of March during the onset of the COVID-19 pandemic. Between March 2, 2020 and May 28, 2020, the Peso lost approximately 11.4% of its value compared to the US Dollar as a result of the economic and financial regression instigated by the pandemic. However, after this initial strengthening, the US Dollar has steadily lost ground against the Peso throughout 2020 and the early months of 2021.
Canadian Dollar (CAD-MXN)
Much like the US Dollar, the Canadian Dollar rapidly gained against the Peso during the early weeks of the COVID-19 pandemic, hitting a high of 17.7326 on April 6, 2020. While the Canadian Dollar has not declined against the Peso as much as the US Dollar has, the rate did see a noticeable dip in the second half of 2020. In the early months of 2021, the Canadian Dollar has seen an upward trend and regained some lost ground against the Peso.
Does your business import goods or services from Mexico?
If your business works with the Mexican Peso in any way, you will need to pay attention to changes in the currency markets. Market volatility and changes in exchange rates have the potential to dramatically increase your importing costs
With some preventative measures, you can protect your business and your bottom line. Working with an experienced international business payments provider and developing a foreign exchange strategy could reduce the risk of changes in the markets having a harmful effect on your business.
How can you navigate currency market changes when importing from Mexico?
Remember how we mentioned working with an experienced international business payments provider? Here at Xe, we’re ready to be that provider for you. With almost 30 years in the foreign currency business, we understand the markets and how volatility can impact a business. We offer a full suite of money transfer options so you can pick the right method for your business’s payments, and we will also work with your business to devise a tailored FX strategy to suit your business’s needs and minimize your FX risk.
Motion in the currency markets is inevitable. The impact to your business’s bottom line doesn’t have to be.