Remittances to Mexico Surpassed the $6 Billion Threshold for the Second Time in a Single Month

In August, Mexico received $6.087 billion in family remittances. This marks the second-largest amount ever received in a single month, surpassed only by the record of $6.207 billion set in June of this year. Thus, it is the second time that remittances have exceeded the $6 billion mark in a single month.

During the eighth month of the year, the Mexican peso depreciated by 5.4%, which fueled a 9.3% growth in remittances to Mexico in U.S. dollars and a 17.0% increase in real terms when converted to pesos, according to a report by BBVA Research.

“In real terms, when converted to pesos and adjusted for inflation, remittances in August grew by 17.0% compared to the same month last year, representing a significant increase for the households that receive these funds,” the report explains.

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A large portion of the remittances sent to Mexico comes from the United States, where nearly 95% of the world’s Mexican migrant population resides and the major fluctuations in the exchange rate between the Mexican peso and the U.S. dollar impact decisions by Mexican nationals regarding how much money they send to Mexico, the document notes.

“The Mexican population abroad, unsure whether exchange rate increases are structural or temporary, takes advantage of the moment to slightly increase their remittance amounts in U.S. dollars so they convert into a higher relative amount of pesos when collected in Mexico.” BBVA Research’s department

Financial Health of Remittance-Receiving Households

BBVA Research’s department measured the financial health of individuals in remittance-receiving households based on four pillars: control, security, resilience, and financial freedom.

The report, published on October 2, indicates that 25.6% of individuals in remittance-receiving households feel completely or very confident that their savings will be enough for the future, a higher percentage than those in households that do not receive remittances (23.6%); meaning they have a greater level of financial freedom.

Regarding the other three variables—control, security, and resilience—the results are lower:

• Financial Control: 15.6% of individuals in remittance-receiving households believe they are fully or very well securing their financial future, compared to 20.6% of individuals in non-remittance-receiving households.
  
• Financial Security: Remittance-receiving households have a slightly lower percentage than the rest of the population regarding whether they always or almost always have money left over at the end of the month (19.0% vs. 19.4%).
  
• Financial Resilience: Among those who receive remittances, 28.6% state they are fully or very capable of handling a major unexpected expense, compared to 33.9% of those who do not receive remittances.

Angélica Simón Ugalde