Economic news

Remittances to Mexico near all-time high in June but strong peso weakens impact

2023.08.01 14:55


© Reuters. Martha Meza looks at a board that shows the exchange rate of the Mexican peso against the U.S. dollar outside of a foreign exchange house, in Ciudad Juarez, Mexico July 27, 2023. REUTERS/Jose Luis Gonzalez

MEXICO CITY (Reuters) – Remittances to Mexico totaled $5.57 billion in June, just under the all-time high reached the month before but dampened in real terms by the sharp appreciation of the peso against the dollar.

June remittances — money sent home from Mexican workers abroad — were 8.3% higher than a year ago, data published by the country’s central bank Tuesday showed. However, in pesos, remittances actually declined 6.2% year-over-year, said Goldman Sachs (NYSE:) analyst Alberto Ramos.

The peso strengthened more than 15% versus the dollar from June 2022 to June 2023, boosted by higher interest rates and “nearshoring,” or the relocation of manufacturing largely from Asia to the area.

The appreciation has caused some Mexican communities, who rely heavily on remittances sent from the United States, to clamp down on spending. Meanwhile, some workers in the U.S have tried to send more cash home to cushion the impact.

With the June increase in remittances, Mexico reached a quarterly record of $16.3 billion, and broke a 12-month record of $61.2 billion.

Mexican President Andres Manuel Lopez Obrador has said Mexico is expected to rake in more than $60 billion this calendar year. In the first half of the year, remittances reached $30.2 million.

However, with economic activity in the United States moderating, remittances to Mexico will likely slow in coming quarters, Ramos said.

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