Mexico's banks will open Monday for the first time since they were nationalized last week and a new dual exchange rate sets the peso at 70 to the dollar for most transactions. That figure is a full 35 pesos lower than the closing rate on Tuesday when the currency was allowed to float.
As part of a series of measures announced last night by newly appointed Bank of Mexico Director Carlos Tello, Mexico's nationalized banks also will sell their interests in the country's private businesses as the appropriate "moment and opportunity" arise. The new two-tiered exchange rate is set at 50 pesos to the dollar for essential imports and 70 pesos for all other transactions.
Thus in one move the government appears to have laid to rest some of the greatest immediate questions hanging over the country's financial system since lame-duck President Jose Lopez Portillo declared all domestic banks property of the state and imposed strict exchange controls on Wednesday.
Two major questions that had concerned Mexican businessmen and others were what new exchange rate and system would be used and whether the nationalization of the banks, which owned a majority interest in many enterprises, would be the first step toward imposition of a socialist economy.
The new measures and regulations announced this weekend appear aimed at appeasing Mexico's wealthy business leadership to win vital economic support while garnering more political points with the poor. In effect, both prices and wages will be perceived as higher in this country where most people think of their pesos in terms of dollars.
For tourists the new exchange rates mean that Mexico is still more reasonable than it has been for years, but the bargain is not ridiculously cheap.
When the dollar was trading at more than 100 pesos, for instance, a four-day package trip from Mexico City to the exclusive resort at Las Hadas cost about $120. Now, if prices hold, it will cost about $172.
But for Mexicans, the crisis in confidence that helped precipitate the current crunch lingers and there is extensive speculation that Monday will see a run on the banks by depositors weary of what Tello called the "financial disorder of August."
In the space of one month the price of basic goods such as tortillas, bread and gasoline doubled; the peso's value plunged from 46 to more than 100 to the dollar, and Mexico had to face its stunning foreign debt of at least $76 billion and seek a bail-out through renegotiation and emergency financing from international institutions and banks.
Policy was divided and erratic. On the one hand, what international bankers consider responsible fiscal policy demanded an end to subsidies. On the other, the tens of millions of Mexicans who live on the margins of poverty could not survive without them.
Thus the price for a kilo of tortillas went from 5.50 pesos to 11 at the beginning of August. But the subsidy needed to maintain even that price will amount to more than $300 million by the end of the year, according to figures released by Lopez Portillo.
Each new measure to restore faith in the economy seemed to heighten the confusion, especially since the exchange rates varied so much.
"Characteristic of the new system, is its clarity and simplicity," said Tello. "There are two exchange rates and only two: one applicable to the importation of goods essential for the functioning of the economy and the debts of the public and private businesses -- 50 pesos to the dollar -- . . . and the other for everything else at 70 pesos."
Tello added that "the rates will stay fixed" at the current levels, there will be no floating and there will be no difference between the buying and selling price of a dollar at the bank, a margin that varied by as much as 18 pesos in recent weeks.
On the other hand, the number of dollars available will be tightly controlled at both exchange rates.
The effect of the new measures on the talks with essentially conservative international financial institutions such as the International Monetary Fund, which generally oppose artificially high exchange rates, is also unclear.
Washington Post staff writer Hobart Rowen reported from Toronto, where the annual meeting of the IMF and World Bank is to open Monday that a high U.S. official expressed doubt that Mexico could hold a rate of 70 pesos to the dollar. "I don't think it's realistic," he said.
Within Mexico, Tello said, there will be enough peso bills at all banks Monday to cover "all possible checking account transactions" with the only limitation being the normal wait in line at cashier windows.
A major concern of businessmen is the extent to which the government, through the bank nationalization, would hold major, in many cases majority interests in all but a small portion of the country's businesses.
But Tello said that "the government has no intention of keeping businesses that are properties of the bank." He said that at an as yet unspecified date it will sell off its stock in these enterprises through the Mexican stock exchange.
He also suggested that the sale of these stocks may be used as partial payment for the banks' former owners.