Remittances To Mexico Hit Record, But Strong Peso Softens Impact

• Mexico brought in close to $5.7Bn in remittances in May, central bank data showed, breaking a monthly record that analysts cautioned was softened by the recent strength of the peso versus the dollar.
• While Mexico records remittances in dollars, as most of the funds come from the United States, "a strong peso hurts remittances," said Goldman Sachs analyst Alberto Ramos.
• Mexico's "super peso" is among the top-performing currencies this year, appreciating more than 13% against the U.S. dollar from May 2022 to May 2023. With a stronger local currency, recipients of funds from abroad receive fewer pesos when they sell the dollars they were sent.
• Given the peso's appreciation against the dollar, when measured in local currency, remittances declined 2.2% year-on-year, Ramos said.
• Nonetheless, Mexican President Andres Manuel Lopez Obrador has touted the economic boost remittances, which largely come from the United States, have brought to the country.
• Last year, remittances to Mexico from abroad hit a record high of $58.5Bn, making Mexico the second highest remittance-receiving country, just behind India.
• Despite the blow from the "super peso," the dollar amount of remittances sent in May rose almost 11% year-on-year.

(Source: Reuters)