Remittances to Mexico jump in May to second highest level on record

MEXICO CITY, July 1 (Reuters) - Mexico saw remittances, one of its main sources of foreign exchange, jump in May to its second highest level since records began in 1995, central bank data showed on Wednesday.

Mexico received $3.38 billion in remittances in May, versus $2.86 billion the prior month and $3.28 billion in May 2019, the data showed.

Most of the money sent to Mexico comes from the United States, which is home to millions of people of Mexican origin.

“Great sacrifice by our countrymen working in the United States, who faced with a historical unemployment rate, still made sure to send their monthly remittance to their relatives in this country. My respects,” Jonathan Heath, board member of the central bank, wrote on Twitter.

Workers abroad are likely taking advantage of a favorable exchange rate after the peso weakened versus the dollar as emerging market currencies took a battering amid the economic fallout of the coronavirus pandemic.

The sharp increase in remittances is a boon for low-income families who have been hit particularly hard by job losses because of the coronavirus pandemic.

“Solid workers’ remittances flows have been adding support to the current account and to private consumption, particularly for low-income families, who have a high propensity to consume and are the overwhelming recipients of such transfers,” Alberto Ramos, economist at Goldman Sachs, wrote in a note.

The sharp contraction of activity and employment in the United States do not appear to be hurting the flow of remittances to Mexico, Ramos said. (Reporting by Anthony Esposito; additional reporting by Stefanie Eschenbacher; Editing by David Gregorio)