Mexico is on track for a record-setting year in 2024, after more than US $6.2 billion in remittances flowed into Mexico in June — the highest monthly total since records were first kept in 1995.
The Bank of México reported Thursday that remittances — the vast majority of which come from the United States — totaled $6.21 billion in June, an increase of 11.3% compared to the same month of 2023 and a 10.5% jump compared to May.
The total was 6.9% higher than the previous monthly record of $5.81 billion in October 2023.
Over the course of June, Mexico received 14.8 million individual remittance transactions averaging $419 each. Analysts attributed the record inflow to the depreciation of the peso after the June 2 elections.
Given that Mexicans abroad didn’t know whether the weaker peso would persist or whether it would be “transitory,” they likely sought to take advantage of the more favorable exchange rate by sending more dollars than usual to their families in Mexico, according to analysts at the bank BBVA.
Alberto Ramos, head of Latin America economics at Goldman Sachs, also said that the record high remittances total was the result of the depreciation of the peso in June.
The peso’s weakest position in June was 18.99 to the US dollar, representing a depreciation of 10.4% compared to the 17.01 USD:MXN exchange rate at the close of markets on the Friday before the elections.
Remittances are a major source of foreign income for Mexico, and many families depend on them to meet their essential needs. They help spur consumer spending in Mexico, which is especially welcome when economic growth is slowing, as was the case in the second quarter of the year.
The vast majority of remittances come from hard-working, honest Mexicans who President Andrés Manuel López Obrador often describes as “heroes.”
However, the think tank Signos Vitales said in a report last year that around 7.5% of the more than US $58 billion in remittances sent to Mexico in 2022 could be linked to drug trafficking.
Remittances topped $31 billion between January and June
The Bank of México also reported that $31.34 billion in remittances flowed into Mexico in the first six months of 2024, a 3.7% increase compared to the same period of last year.
Mexico received a record $63.31 billion in remittances last year, a 7.6% increase compared to 2022.
It appears likely that Mexico will set a new record for remittances in 2024, especially considering that the peso is currently weaker than it was in the weeks after the elections.
Mexico is the world’s second largest recipient of remittances after India.
Outflows of remittances also up, but still dwarfed by inflows
The Bank of Mexico reported that $111 million in remittances was sent out of Mexico in June, a 26.2% increase compared to the same month last year.
That figure is equivalent to just 1.8% of the total that flowed into Mexico in June.
In the first six months of the year, outflows of remittances increased 33.5% annually to $687 million. That figure is equivalent to 2.2% of total inflows in the same period.
A growing number of migrants are settling in Mexico and finding jobs here, a situation that has contributed to the increase in outflows of remittances this year.
With reports from El Economista and El Financiero
