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Peso exchange rate hurting Arizona’s border businesses

Cronkite News Service
DOUGLAS _ G.T. Bohmfalk remembers the days when shoppers flooded in from Mexico to buy from his western wear and saddle shop and from other merchants along G Avenue in this border community.
But business is worse than he’s seen since he began running the family-owned Marlin’s Saddle Shop in 1986.
“I’m getting battered at every turn,” he said. “Even people in their 70s who have been working here say, ‘I don’t know how you make it,’ and the truth is, I don’t know how I’m making it.”

G.T. Bohmfalk, who manages Marlin’s Saddle Shop in Douglas, says business from across the border is the worst he’s seen since he started in 1986. He and other business owners blame a slide in the peso’s value.
(Cronkite News Service Photo/Carolina Madrid)

But for businesses in Douglas and other border towns in Arizona, the problem is bigger than just the shaky U.S. economy. A slide in the peso’s value against the dollar has made it more expensive for Mexicans to shop in the U.S., so fewer customers are making the trips across the border.
In April, the average exchange rate stood at 13.3944 pesos to a U.S. dollar as opposed to 10.5146 in April 2008, a decline of 27 percent.
“It’s just not worth it for them these days,” Bohmfalk said.
Lupita Ruiz and Enrique Torres, assistant managers at a Factory 2-U store down the street, said 80-90 percent of their customers come from Mexico. Sales have plummeted along with the peso’s value.
“Every day is worse for us,” Ruiz said in Spanish. “We’ve started closing two hours earlier, and a lot of employees’ hours have been cut.”
Torres said their regional manager tried to boost business at border stores by offering to buy the peso at a flat rate of 10 during the holidays.
“But I don’t think it was worth it for him, or he was losing money, because that only lasted a few weeks,” Torres said.
Jose Mendez, an economist focusing on international trade at Arizona State University’s W.P. Carey School of Business, said the peso’s slide is an indication of Mexico’s strong dependence on the U.S. economy.

“I would not have expected it, but I suppose because all of their sales are to the United States, the dollar has weakened, but the peso has weakened even more so,” Mendez said.
Joe Morris, store manager for Wal-Mart in Nogales, said the exchange rate isn’t the only factor that has put a damper on border businesses.
“That, combined with the long waiting times to cross and increased security, has just discouraged a lot of people from making the trips,” Morris said in a telephone interview. “They’re just staying in Mexico.”
Olivia Ainza-Kramer, president of the Nogales-Santa Cruz County Chamber of Commerce, said that April proved better than March.
“I think that right now, though, this is a general, nationwide issue,” Ainza-Kramer said in a telephone interview. “The uncertainty in shopping has also affected the Mexican consumer.”
Ken Rosevear, executive director of the Yuma Chamber of Commerce, said wait times at the border have always been a concern for there.
“We have a meeting once a month with the customs people about keeping the line moving because people just turn around and go back home if they have to wait too long,” Rosevear said in a telephone interview.
Mendez, the ASU economist, said Mexico’s economy will improve when the U.S. economy picks up.
“I guess the bright side is that it’s equally sensitive on the upside, in terms of strengthening,” he said. “Once the U.S. economy starts to move out of the recession, then Mexico’s situation will improve.”
But Bohmfalk, owner of the saddle shop, said U.S. Customs should try to make the border-crossing process easier for Mexican shoppers.
“It can’t be so burdensome for the shoppers,” he said.
Elena Verdugo, manager at a Dollar Tree store in Douglas, said long lines have always been a problem.
“It’s more the peso (exchange rate) that has been hurting is,” Verdugo said in Spanish. “I just hope it gets better soon.”

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