Mexico | Remittances contract, US employment and exchange rate create volatility

Summary

Remittances have been volatile over the past five months. Increases have been reported in two of them (April and June, even months) and declines in three months (March, May and July, odd months). In August, the peso depreciated 5.4%, so the next remittance report is expected to show growth.

Key points

• Key points:
• In July, 5,614 million dollars (md) were received in remittances to Mexico, which represents a reduction of 1.0% at an annual rate, despite the fact that in June the historical maximum in the reception of remittances in a single month was reached (6,207 md).
• The slowdown in job growth in the U.S. possibly reduces the migratory flow to that country and the sending of remittances to Mexico. Migrant encounters on the U.S. southwestern border have accumulated 5 consecutive months of decline, reaching 104,000, its lowest level in 3.5 years.
• It has been pointed out that the restrictions on asylum applications implemented since June 2024 by the Biden administration have been an effective measure to contain undocumented migration, however, a large part of undocumented Mexican migrants do not request asylum in that country.
• Remittances have been very volatile in the last 5 months. They have reported significant increases in two of them (April and June, even months) and declines in three months (March, May and July, odd months). In August, the Mexican peso depreciated 5.4%, so the next remittance report is expected to show growth.
• Gray clouds over employment indicators in the US and fluctuations in the exchange rate of the Mexican peso against the U.S. dollar will maintain uncertainty in remittances during 2024.

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