Remittances to Mexico hit third highest level on record in July

MEXICO CITY (Reuters) - Remittances sent to Mexico, a major support for the Mexican economy and in particular for low-income families, continued its historic 2020 run and rose in July to the third highest level on record, central bank data showed on Tuesday.

Mexico received $3.53 billion in remittances in July, up by more than 7% compared to the $3.29 billion in remittances the country was sent the same month last year.

Remittances hit their highest level since records began in 1995 in March of this year and then reached their second best level in June.

Most of Mexico’s remittances are sent by the millions of Mexicans living in the United States and are a pillar of support for Latin America’s second largest economy, which suffered in the second quarter its deepest slump since the Great Depression.

Remittances are also one of Mexico’s main sources of foreign exchange.

Goldman Sachs economist Alberto Ramos said that the sharp contraction of activity and employment in the United States has not visibly impacted the flow of remittances to Mexico.

“Generous wage/income support fiscal transfers in the U.S., a very competitive MXN/USD level, and a deep contraction of activity and employment in Mexico may have acted as both push and pull drivers of dollar remittances from the U.S. to Mexico,” said Ramos.

Reporting by Anthony Esposito