The Mexican president, Andrés Manuel López Obrador, is in the final stretch of his six-year term.
He will leave office on October 1, and a point he has made repeatedly since he assumed leadership of the executive in 2018 has been the record remittance figures during his tenure.
Although this income represents an important element in the Mexican economy,
its benefits have been diminished
by inflation in the United States and Mexico, as well as by the
super peso
, the nickname that the Mexican currency earned after registering a record rise—of almost 13 %—against the US dollar in 2023, positioning itself as one of the best-performing emerging currencies in the world.
“Money is not enough,” says Miriam Maldonado, from El Paso, Texas, in a telephone interview with Noticias Telemundo.
She sends remittances to her grandchildren in Chihuahua.
"With the exchange rate that has existed in Mexico, in addition to the fact that families in the United States are also going through an economic crisis, many times they do not have the same economic fluidity to be able to send the same amount of money that was sent before."
In practical terms, this means that, if a person previously received 20 pesos for every dollar, under the current parity they receive about 17 pesos, 3 units less.
And with internal inflation, not only do they have fewer pesos, but they buy less with that money.
Economic crisis on both sides of the border
Manaces Olvera, a law student in Mexico City, explained to Noticias Telemundo that he previously paid his tuition with approximately $600 and that now he has to pay up to $800 or $1,200 due to inflation.
“That's why I had to look for a job, from the second, third semester, to be able to add a little more to my expenses throughout the week,” explained Olvera, 24 years old, who is in the seventh semester of his degree.
“Before they sent me $50 a week to cover my expenses, public transportation, food.
But now that money doesn't work for me."
And in the United States, the situation for many Latinos is equally complex when trying to make money work in two countries where the basket of basic products, rents and transportation have become more expensive.
“People in the United States are often maintaining two families: the family that lives in the United States, plus the family that lives in another country.
And many times the quality of life of the person who is in the United States is not on par with other Americans who do not distribute their income to other families,” says Maldonado, who is a psychologist and pianist.
“Then they say, well, why is the Mexican not advancing in the United States, because he
is not advancing because his money is being distributed among two or three families.
He sends the wife who stayed in Mexico, the mother who stayed in Mexico and then there is no shortage of brothers who ask for money.”
Record remittances
Although remittances to Mexico have been on the rise for 10 years, according to an analysis by the BBVA bank published on February 1, they have had a more marked increase in the last three years.
“I want to take this opportunity to reiterate our gratitude to our migrant brothers, to our countrymen,” said López Obrador in February 2023 when announcing the record figures for this income in 2022. “We are in second place in receiving remittances,” he added. Thus, Mexico was placed after India and before China.
In 2023, the country received more than 63,000 million dollars in income from remittances, an amount that exceeded the 58,868 million dollars reported in 2022 and which represented an annual growth of 7.6%, according to data from the Bank of Mexico (Banxico).
Then they say, well, why is the Mexican not advancing in the United States, because he is not advancing because his money is being distributed between two or three families.
MIRIAM MALDONADO, PSYCHOLOGIST
The only item in the national balance of payments that exceeds this amount is the export of automobiles and auto parts, explains Luis Foncerrada, chief economist of the American Chamber of Commerce of Mexico to Noticias Telemundo.
“So, (remittances) have become a fundamental item in the balance of payments.
It does not enter as a foreign exchange income from export, but it does enter as a foreign exchange income from a direct transfer without counterparty.”
However, experts also maintain that, although the record of remittances can be seen in positive terms, as money coming in, they also have their negative side.
"Deep down it is also a failure that Mexico has not been able to provide jobs to a very good proportion of the population that has to go to the United States," highlights economist Fausto Hernández Trillo, research professor at the Center for Research and Teaching. Economic company based in Mexico City.
The 'super weight'
There are three factors that explain the strength of the Mexican peso: a greater flow of dollars to the country that arrives not only due to growth in exports, remittances and foreign investment, but also due to the monetary policy of the Bank of Mexico of maintaining rates of high interest.
Thus, paradoxically, remittances, which are diminished by the strengthening of the peso, also contribute to its appreciation.
And the peso is now within the group of currencies of emerging economies that have gone through a good cycle.
“It is true that remittances have been increasing, and that is capital inflow.
Just as pension funds arrive, when dollars enter the Mexican economy, the peso appreciates,” explains Hernández.
Noticias Telemundo previously reported that the president of Mexico, Andrés Manuel López Obrador, has repeatedly referred to
“the hefty peso”
as one of the “achievements” of his Administration, after it was speculated during his 2018 election campaign that A left-wing government in Mexico would send the exchange rate through the skies due to a feared capital flight.
However, economist Arturo Vieyra, opinion columnist in the newspaper La Razón, highlighted in a telephone interview that
the appreciation of the peso is not a direct result of the federal government's policy
, but rather of other factors such as an increase in remittances, greater investment in the country and a monetary policy that is not formulated by the president, but by the autonomous board of the Bank of Mexico.
The impact of inflation on both sides
One of the effects that has been most felt on both sides of the border as a result of the COVID-19 pandemic has been inflation.
Rising food prices have been the main driver of this since 2020, combined with labor shortages and supply chain failures.
In the United States, an analysis by Telemundo's sister network, NBC News, of data from the Bureau of Labor Statistics, showed that in 2023, consumers paid almost 40% more for a basket of basic products than before the pandemic.
Meanwhile, in Mexico inflation also puts pressure on consumers' pockets.
In both rural and urban areas, the cost of the basic food basket increased by 6% in September 2023, as reported by El Economista.
The interannual rate that year was 4.45%.
“I can say first-hand that it is a little more difficult for us, that our relatives help us,” says Olvera.
“That is to say: you are working, you are making an effort, and we say that your effort is not enough for us.
It is the detail, because it is not only monetary, it is empathy towards the people who are on the other side working and making an effort,” she adds.