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Word Count: 712
MONETARY DEVALUATION Like every other product the coin of a country has a price which is the exchange type this represents the quantity of Mexican pesos that are needed to buy an American dollar and like every other price this one is determined because a Because of the offer and demand of dollars or b Because of the monetary authorities of the country The origin of the exchange types comes from the necessity that residents of one country have to buy another countrys money in order to cover their international debts In Mexicos case residents demand dollars to buy goods and services from the exterior imports the offer of dollars comes from the selling of goods and services to the exterior exports as well as the income of capital such as foreign savings or direct investment When imports and exports are not balanced the offer and demand of dollars is altered which can also be affected in a short time for speculative reasons or simply as a precaution MEXICOS CASE The changes in the economical situation of our country or in the ones with whom we realize mostly the exchange of goods and services affect the behavior of demand and offer of dollars and as a consequence its price If in Mexico the exchange type maintains fixed and the tendency of high prices is bigger than that one of the countries with whom we handle business normally we will have a relative expensiveness of our goods and services with respect to the foreign ones At the same time foreign products will be cheaper to us This situation provokes an increment in imports carrying the demand of dollars while the offer reduces as exports weaken To stop this unbalance between offer and demand and not devaluating the coin the government goes to external credit establishes control over imports subsides exports etc A situation of this type cannot maintain undefined A way
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