The weak peso is dev­as­tat­ing Laredo, Texas

One of ev­ery two retail dol­lars is spent by vis­it­ing Mex­i­cans “Now, with the peso, my cus­tomers aren’t com­ing any­more”

Bloomberg Businessweek (Asia) - - CONTENTS -

Cindy Gal­le­gos, an el­e­men­tary school teacher from Nuevo Laredo, Mex­ico, has sticker shock while look­ing for lace for her wed­ding dress. She’s in a fab­ric store just over the Rio Grande, in Laredo, Texas, and the price tag is $63. “It’s too ex­pen­sive,” she says. “When con­vert­ing to pe­sos, the price is im­pos­si­ble.”

Sur­rounded by racks of dresses and colorful rolls of cloth, the store’s owner, Sil­via Guerra, says: “We are dead over here. Busi­ness is dead.”

The peso is down 16 per­cent against the dol­lar in the past year, low­er­ing the pur­chas­ing power of Mex­i­cans vis­it­ing the U.S. All Texas bor­der cities are feel­ing a pinch. State data shows sales-tax re­ceipts down as much as 6 per­cent in the se­cond quar­ter from

a year ago, af­ter years of boom-time in­creases. But mer­chants in Laredo — where an es­ti­mated one of ev­ery two retail dol­lars is spent by Mex­i­cans—say busi­ness is off 50 per­cent or more.

“We are talk­ing about mil­lions and mil­lions of dol­lars per day that Mex­i­cans spend in Texas,” says Roberto Coron­ado, an econ­o­mist at the Fed­eral Re­serve Bank of Dal­las. “The city that de­pends the most on them is Laredo.”

Some of the pain is a reg­u­lar part of the ebb and flow in a slice of the U.S. econ­omy that’s re­liant on for­eign­ers and a city that, with four in­ter­na­tional bridges, is the coun­try’s big­gest in­land port. “When the Mex­i­can peso gets a cold, Laredo sneezes,” says Les Nor­ton, head of the Down­town Mer­chants As­so­ci­a­tion. But to­day Laredo is tak­ing two hits at once. The peso is down largely thanks

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