Navigating Exchange Rate Fluctuations in Mexico

Unsurprisingly, the lower cost of living is one of the most attractive things about living in Mexico for many expats. And while I strongly advise this not to be the only reason you move to Mexico, I also recognize it’s one of the most important factors you are considering when researching. 

Another essential thing to consider when researching moving to Mexico is the exchange rate fluctuations in Mexico.

What This Means For Your Pocket

In 2022 the exchange rate was an average of 20 Pesos to 1 Dollar. 

If you were seeking a rental in the $700-$800 USD a Month range, you would be looking for rentals that cost around $14,000 -$16,000 Pesos. 

But the drastic drop in the exchange rates in 2023 has people concerned. Recently the exchange rates have been hovering around 17-18 Pesos to 1 USD.

This means that the same rentals in the $14-16,000 Peso range now convert to roughly $800-940 USD a month. 

That’s a sudden increase of 14-18% in the cost of rentals only because the exchange rates are now less favorable.

How To Maximize Your Budget

So what can you do to help yourself and maximize your income? 

It is extremally vital that while you work up your budget and calculate what you are comfortable spending when you move to Mexico, you also consider that the exchange rates fluctuate daily. 

A good rule of thumb is to leave a 10-15% margin in your budget to account for a fluctuation in the exchange rates. 

But if you follow that advice and rent a place at your max budget last year, you may be in trouble this year if the price suddenly goes up 18% or more. 

This is why it is also essential for you not to rent places at the max end of your budget and leave some wiggle room to negotiate the cost of a rental so you aren’t drowning each month in expenses. 

And even though I have seen a significant decrease in the cost of rentals (probably because landlords are starting to get pushback from expats who feel the pressure of a lower exchange rate), many prices are highly inflated. It pays for you to shop like a local would. 

Sign Up For Notifications on XE

If you haven’t moved to Mexico yet, I recommend signing up for daily updates from to give you an idea of what the peso is worth in USD or CAD. 

By monitoring the exchange rates and making smart decisions, you can make your retirement savings work harder. It’s a bit like catching the perfect wave – timing is everything! 

And if you’re already in Mexico, I recommend signing up for this notification. Consider converting some of your dollars into pesos when the exchange rate is favorable. This way, you’ll take advantage of the favorable exchange rates and save money on everyday expenses, travel, and leisure activities.

Learn To Live Like A Local And Save!

However, even with the lower Exchange rates in 2023, your cost of living in Mexico will still be significantly less than the same lifestyle back home. 

But it matters how you spend your money. You’ll hear me say it pays to learn to live like a local would. 

If you’re feeling the pressure of the exchange rates on your bottom line, now is the perfect opportunity for you to learn how to find the best rentals in Mexico.

Instead of going to Costco, shop at the local mercados, tianguis, and local shops. 

Instead of buying imported products, learn to embrace Mexican and Latin American brands. 

Instead of flying, take advantage of affordable and very comfortable long-distance buses like ADO, Omnibuses de Mexico, ETN, and the like. 

Consider also that popular expat cities like Playa del Carmen, Tulum, Huatulco, Los Cabos, Puerto Vallarta, Lake Chapala, Mexico City, and San Miguel de Allende will be more expensive than other cities and towns in Mexico. Therefore, you will pay a premium to live in these popular cities. 

And most importantly, learn to research before assuming anything and taking things at face value. 

There Is A Learning Curve

But this takes time, and it also takes trial and error. 

Learn to accept there is a learning curve that EVERYONE goes through. Things at the beginning will likely be more expensive for you while you learn to shop around, adapt, and see what is normal vs. what is inflated. That doesn’t only apply in Mexico but ANYWHERE worldwide.

Once you do, you will understand how others can live on Social Security or other fixed incomes in Mexico and do it comfortably without sacrificing their quality of life. 

The key is to have a strict budget, stick to it, and not be afraid of the fluctuations because you have prepared for them. 😉

Mariana Lange

Mariana Lima-Lange was born in Mexico and immigrated to the U.S. when she was a child. She spent every summer visiting family throughout Mexico and is very knowledgeable about Mexican culture, lifestyle, and traditions. She is fluent in both Spanish and English.

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