The Struggle and Triumph Of The Mexican Peso
Did you know that internationally the Mexican peso was once more highly regarded than the U.S. dollar? Well, it’s a fact. Like most of North American history, the story of the Mexican peso takes many twists and turns. It’s all part of a fascinating journey that took the Mexican peso from its humble beginnings to a dominant currency in Latin America.
The first official currency in Mexico was the Spanish real. There was a silver version of the coin worth 8 real that was called a “peso.” And that’s where the Mexican peso got its name. Spanish currency was based on the weight of silver coins. Which is part of the reason why the Spanish real dominated the international currency market for most of the 17th and 18th century. In addition to the real being backed by silver, the international community trusted pesos issued in North America for another reason. That’s because North American pesos were minted using cutting-edge technology for that time. The result was a coin with milled edges and a reduced weight that made it very hard to counterfeit. With its guaranteed weight in silver and superior production, Asian markets much preferred the peso to any U.S. coinage at that time.
Despite the Spanish real’s popularity in the early 19th century, its winning streak was coming to an end. Due to its devaluation, and a number of other contributing factors, the real wasn’t the global powerhouse it used to be. This loss of dominance helped pave the way for Mexico to create its own coinage.
Upon gaining its independence in 1821, the newly formed Mexican government elected to keep the Spanish currency system. Just over 40 years later, the government began issuing their own currency. The centavo, a copper coin much like the U.S. penny, is worth one-hundredth of a peso. It was the first official peso-based coin issued by the Mexican government. Still, Mexico kept issuing real-based currency for the majority of the 19th century. It wasn’t until 1897 that the Mexican government quit issuing real-based currency altogether. Once the peso was established, it became the most stable and universally accepted currency in Latin America.
During the 1970s oil crisis, the peso suffered a devastating devaluation. As a result, Mexico defaulted on its international debt in the early 1980s. In 1993, the nuevo peso replaced the peso. One nuevo peso was worth 1,000 of the now-defunct former pesos. Three years later, the word “nuevo” was no longer included on the pesos.
The word “peso” in Spanish translates to “weight” in English. Though literal translations can sometimes be muddy, the definition of the peso is abundantly clear. Today, the Mexican peso is a currency that carries weight. Since the 1990s, the peso has continued to be a strong and stable currency in Latin America. In fact, seven countries other than Mexico use the peso, including Chile, Argentina, and Uruguay.
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