EL PASO, Texas (Border Report) – A stronger Mexican peso used to be good news for El Paso merchants, no questions asked. But times change and things get complicated.

With U.S. retail franchises – from Walmart and Costco to Home Depot and Starbucks – operating in Juarez for more than two decades now, fewer Mexican residents have been coming north just to shop.

“Mexicans are staying in Mexico. With the imports they can have, they don’t necessarily have to come (here). Walmart, Costco are doing great over there, which hurts the El Paso economy,” said Tanny Berg, founding board member of the Central Business Association.

The peso this week is trading 17 to 1 dollar in Juarez money exchange houses. According to the University of Texas at El Paso’s May Borderplex Business Barometer, the Mexican currency has shed a seven-year tendency of being undervalued to the U.S. dollar.

View of a Walmart store in Monterrey, Mexico on Dec. 7, 2016. (Photo by JULIO CESAR AGUILAR/AFP via Getty Images)

That is happening on the strength of “healthy exports” to the U.S., Mexican Treasury certificates yielding 11.2% interest as of May 2023, and remittances (money Mexicans living in the U.S. send home to relatives) of $13.9 billion in the first quarter of the year, according to UTEP research.

The U.S.-Mexico-Canada Agreement (USMCA) is also shoring up foreign investment in the Mexican economy, according to the research.

And even though not as many Mexicans have been coming north to shop, the stronger peso might encourage them to.

“Peso movements always affect the Borderplex regional economy,” the May Borderplex Business Barometer stated. “Increased purchasing power encourages residents of Northern Mexico to buy larger volumes of goods and services in El Paso and Las Cruces. Greater manufacturing capacity (in Juarez) will quickly translate into more business and employment opportunities across the region.”

The flip side is that the purchasing power of U.S. residents visiting Mexico, especially the resorts, is diminished.

“It makes it hard for Americans who travel as tourists to Mexico to visit Cancun or any or these other places because the peso is strong and the dollar is weak and it now things cost more,” Berg said. “At the end of the day, as the peso is stronger it ends up costing more to get not just American goods, but goods from all over the world into Mexico. What we’re looking for is a stable peso, where we don’t have devaluations or these constant fluctuations in value.”

The UTEP research warns that currency markets can shift course quickly. A U.S. recession, for instance, could affect investment in Mexico and that will make the peso depreciate faster than the dollar.

The CBA says “the jury is still out” on the stronger peso making a difference in Downtown El Paso retail sales.

“What we are looking for is different approaches. We need a 2023, 2030 approach to how we deal with Mexico,” Berg said. “We cannot rely on what was being done in the 1900s or even the 2000s. I think we need to reinvent how to interact and come up with a way that works best for both sides.”