Remittances Watch: Jan-Nov flows to Mexico top 2017 total

Thursday, January 3, 2019

The Mexican central bank reported that remittances from January to November climbed to US$30.5bn, surpassing the 2017 full year total of US$30.3bn and marking a 10.9% increase over the same period last year.

Remittances in November alone came to US$2.91bn, an increase of 20.2% over November 2017, reflecting the sustained surge in fund transfers to Mexico since 2016, peaking at an all-time high of US$3.16bn in May 2018.

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Stronger remittances have also been seen throughout Central America and have been tied to the strong US labor market in 2017-18, as well as anti-migration rhetoric in the US, ostensibly pushing undocumented migrants to send home larger amounts more frequently.

In a note, Mexican investment bank Monex stressed that the performance of the US labor market would likely bring a strong finish to the year in terms of December remittances.

"In addition, the contribution in Mexican peso [terms] could also end up being positive given the depreciation that had been building for the Mexican currency since the start of the fourth quarter of 2018," read the Monex note, adding that the peso has strengthened in the last couple of weeks.

Currency weakness in November saw remittances in peso terms jumping 31.2% year-on-year, according to Monex's calculations, noting that the exchange rate to the US dollar had increased from 18.92 in November 2017 to 20.26 in November 2018.

Extending this form of comparison to the full year, Monex said the increase in remittances in peso terms from January to November was 13.9% compared to the first 11 months of 2017.

Central bank data also showed there were 8.48mn money transfer transactions (+8.6% y-o-y) in November, resulting in an average remittance of US$343 (+10.6% y-o-y). From January to November, the bank recorded a total of 94.7mn transactions (+6.1% y-o-y) for an average remittance of US$396 (-0.2% y-o-y).