According to the central bank, Mexicans living abroad sent $10.6
billion back to Mexico during the first half of 2010. The
overall level of remittances was down 4.1% from the same period one
year earlier. The average remittance transaction was $317.41,
down 3.3% year-over-year. Figures for June alone showed an
even smaller decline. June remittances totaled $1.9 billion,
down just 2.0% from one year earlier. The average remittance
in June was $321.09, up 0.1% from June 2009.
Comment: Remittances are an
important source of foreign exchange for Mexico, and the money that
Mexicans living abroad send back to their families in Mexico helps
buoy consumer demand. During the "Great Recession," the
decline in the U.S. economy meant that many Mexicans living north
of the border saw their incomes seriously reduced, and that led to
a painful decline in remittances. Total remittances in 2009
were down a whopping 15.7% from 2008. Now that the U.S.
economy is growing and producing at least some new jobs again,
remittances are leveling off. That should help support the
recent upward trend in the Mexican economy and put upward pressure
on the peso.
Patrick Fearon, CFA
Vice President, Fund Management