US remittances to Mexico jump most in 10 years

03 January 2017

Remittances from the United States to Mexico jumped the most in over 10 years in November, which is seen as a possible reaction to the US election victory of Donald Trump, who threatened during his campaign to block the transfers.

Mexicans abroad repatriated nearly $2.4 billion in November, 24.7 per cent more from the year earlier, which marked the highest pace of expansion since March 2006, Mexican central bank data showed yesterday.

Targeting Mexicans, Trump threatened to halt transfers unless Mexico agreed to pay for the massive wall he vowed to build on the US southern border to keep out illegal immigrants.

Trump's surprise 8 November election triumph also sent the Mexican currency to record lows in a sell-off fueled by his threats to scrap a trade deal between Mexico and the US, and to levy punitive tariffs on Mexican-made goods.

Goldman Sachs economist Alberto Ramos wrote in a client note the weak peso had led to the remittance surge, as workers could be "strategically front-loading" transfers to avoid potential taxes or restrictions from the incoming US administration.

He added that the value of remittances considerably exceeded that of Mexico's oil exports.

In October, a year-on-year growth of 7.1 per cent had been witnessed, with remittances declining by 6.8 per cent for the month, while on a month-on-month basis; an increase in growth of 6.6 per cent was registered in November.

In addition to worries regarding the electoral campaign rhetoric of Trump targeted at Mexico, another reason for the marked increase in remittances was the sharp decline in the Mexican peso against the US dollar, according to commentators.

They add Trump's views on trade protectionism which included levying steep tariffs on imported goods to improve 'unfair' trade deals, had also led to the decline in the peso.

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