UTEP professor says lack of purchasing power, border closure combine for double economic whammy

EL PASO, Texas -- According to a new study from a UTEP economics and finance professor, the value of the Mexican Peso is falling during the coronavirus pandemic and may further exacerbate the existing economic problems caused by the U.S. border closure to non-essential travel.

The study findings came it was announced Tuesday that the border closure was being extended to July 21.

Downtown El Paso business owners had hoped the bridges would open up sooner so their business could pick up, but now they’ll have to wait longer.

Add to that, the purchasing power of Ciudad Juárez's consumers is losing strength.

Benjamin Kim, owner of a downtown sneaker store, has been trying to stay in operation amid the slow trickle of shoppers from Juarez due to the closure of the bridges to non-essential travel from Mexico.

“As long as the border is closed, the business in downtown is very slow. So for small businesses it is harder to survive,” Kim said.

Add the Peso devaluation to the border closing situation, and UTEP Prof. Tom Fullerton said it could be a double-edged sword.

He said it may help investors take a positive look at Juárez industries such as maquiladoras, but it's also likely to take away purchasing power from border shoppers.

Fullerton added that if another wave of the coronavirus expected in the fall hits sooner than that, the Peso would be negatively impacted even further.

“If a second wave actually materializes in July, that’s going to catch the financial markets by surprise. It's going to cause the Peso to weaken substantially,” Fullerton predicted.

The negative side to an even weaker Peso is that shoppers from Juárez could become even more scarce, which is not the news businesses in downtown El Paso want to hear.