Question

Which explains why the value of the peso has dropped significantly since the early 1990s?

Answer 1

A banking crisis in the 1990s followed by a global recession in 2008

Answer 2

The answer is: a banking crisis in the 1990s followed by a global recession in 2008.

During the government of Carlos Salinas in Mexico (1988-1994), the banks in Mexico were privatized which led to a banking crisis based on corrupt and unsupervised banking practices that, amongst many other factors (social unrest and geopolitical relationships and treaties), led to the “tequila crisis” in Mexico, which eventually affected the whole of the world´s economy. During this time, the Mexican peso was significantly devaluated.

Later, in 2008, due to the global recession that originated in the USA, Mexico felt, and still feels, the consequences of this economic hardship: the peso, during these years, has gone from being worth less than 10 pesos per dollar, to 20 pesos per dollar.