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

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. [ABSTRACT FROM AUTHOR]