Article by Currency Information and Research

History of Mexican Peso

The Mexican Peso is one of the oldest currencies in North America. Its original design follows from the Spanish silver dollar and original eight pieces. It was an official tender in both the U.S.A and Canada until the mid-1850s. To be precise the U.S.A until 1857 and Canada until 1854 accepted Mexican Pesos along with other coins. The Mexican peso is the descendant of the Original eight piece that the Spanish government issued in Mexico. Mexico continued the same pattern for their currency after gaining their independence. At one time the Spanish dollar was an acceptable mode of payment in places as remote as China. The Mexican peso continued to be the most stable and safe currency. So much so, that the Mexican Peso inspired the American Dollar’s design. Later the Mexican government changed the value of one peso to one hundred centavo.

Throughout 20th century, the Mexican peso continued to be a safe and stable currency until the oil crisis of 1970s which caused the increase in foreign loans to Mexico. It continued to worsen until finally the Mexican government defaulted on the payment of its international loans. It started a long downward spiral that was a result of investors taking their money out of Mexico. This trend continued unabated until the early 1990s when the government made some fundamental changes in the monetary policies. One of the first of these changes was to reevaluate the value of the Mexican peso. They changed the value of 1000 pesos to one peso. They called this Nuevo peso. It literally translates as new peso. In addition, the government changed the ISO code from MXP to MXN.

The government printed new currency notes with the smallest note having a value of 10 pesos. The Largest had a value of 1000 pesos. In the beginning, they carried a prefix N for Nuevo but after 1996 they stopped printing the N. Although technically it is still Nuevo, people now just call it the peso. New coins were also minted with their smallest value of 5 centavo and largest of 50 pesos. There are some commemorative coins with the value of up to 100 pesos. One more important factor is that the Mexican government did not officially remove the 10-peso bank notes from the market but they are not printed anymore and are almost nonexistent.

In recent times the peso has remained more or less steady against the US dollar and other major international currencies. Although the peso has come under pressure from international recession that is becoming apparent in Europe. One thing that is evident from making a qualitative study of the historical data is that the strength of a currency has a direct correlation with the strength of the economy. As is evident from the economic meltdown experienced by Mexico, during 1970s and 1980s, which is why the Mexican peso is experiencing trouble. As most of the Mexican economy generates its revenue from exports therefore, it is suffering from deepening crisis in international market.

On the upside, the future of the Mexican peso is looking bright as the Mexican economy has a wide and diverse base.