Remittances Rise as Mexicans Take Advantage of Exchange Rate Anthony Harrup - WSJ.com
go to original September 2, 2015

Mexicans living in the U.S. tend to take advantage of spikes in the exchange rate to send more money home, benefiting recipients who get even more in peso terms. (Susana Gonzalez/Bloomberg)

Mexicans took advantage of the firming U.S. labor market and a weakening peso against the dollar to send a lot more money home to families in July, as remittances overtake crude oil this year as a source of dollar inflows to Mexico.

Mexicans sent home $2.23 billion in July, a 12% increase over the amount transferred in July 2014, which brought the total for the first seven months of the year to $14.3 billion, up 5% from the comparable period of 2014, the Bank of Mexico said Tuesday.

“In our view, the spike in remittances has to do with the depreciation of the peso against the dollar, and to improvements in the U.S. labor market that have favored migrant workers,” said Alejandro Cervantes, an economist at Banorte.

The peso has reached all-time lows against the U.S. currency in recent months, recently trading in Mexico City around 16.93 pesos to the dollar after the rate moved above 17 in late August.

With the slump in world oil prices, remittances have overtaken crude oil exports this year as a source of dollar revenue to Mexico, and at $14.3 billion in the first seven months were almost as much as the $15 billion Mexico received from total petroleum exports.

That isn’t likely to develop into a trend, as Mexico’s opening of the oil industry to private and foreign investment is expected eventually to recover its levels of production, Mr. Cervantes said.

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