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Commercial Bank and Currency Bureau Exchange Rate Sell-Buy Spreads in a Northern Mexico Metropolitan Economy

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  • Thomas M. Fullerton
  • Francisco J. Pallares

Abstract

Commercial banks and currency kiosk bureaus provide exchange services throughout Ciudad Juarez. This study employs newspaper data to examine how the bank and kiosk sell-buy spreads are affected by border crossings, the bilateral peso per dollar exchange rate, and 90-day Mexico – U.S. treasury yield differentials. Sample data are from January 2009 through June 2016. Parameter estimation is carried out using a GLS ARMAX procedure. Empirical results indicate that bank spreads increase as the peso weakens. Exchange bureau spreads decrease as cross-border traffic flows increase. Currency kiosk spreads tend to widen as 90-day yield gaps become larger.

Suggested Citation

  • Thomas M. Fullerton & Francisco J. Pallares, 2024. "Commercial Bank and Currency Bureau Exchange Rate Sell-Buy Spreads in a Northern Mexico Metropolitan Economy," The International Trade Journal, Taylor & Francis Journals, vol. 38(2), pages 158-170, March.
    • Handle: RePEc:taf:uitjxx:v:38:y:2024:i:2:p:158-170
    DOI: 10.1080/08853908.2021.2023058
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