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Mexico's Remittances Continued to Decline in November

01/02/2013 | 11:00am US/Eastern
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--November remittances down 5.1% to $1.69 billion

--November marks the fifth consecutive month of decline in remittances

--Stronger peso, employment lag seen behind decline

--January-November remittances down 1.3% to $20.74 billion

 
   By Anthony Harrup 
 

MEXICO CITY--Remittances from Mexicans living abroad fell in November for a fifth consecutive month, declining 5.1% to $1.69 billion, the Bank of Mexico reported Wednesday.

The drop in November from a year earlier brought remittances for the first 11 months of 2012 to $20.74 billion, down 1.3% from the first 11 months of 2011.

Transfers of money home began to decline in July, after a positive first half of the year.

In its most-recent report on migration, BBVA attributed the drop in the second half of the year to a stronger peso, which discourages remittances as recipients receive fewer pesos per dollar, and to lower employment and wages among Mexicans living in the U.S., compared with other immigrant groups.

While other Hispanic groups in the U.S. have recovered levels of employment in the wake of the 2008-2009 crisis, Mexicans have done so to a lesser extent, BBVA said. The bank suggested that one reason is a greater impact on Mexicans of the U.S. crackdown on illegal immigration, particularly a controversial law passed in Arizona, "since 60% of the undocumented migrant workers in the U.S. are Mexicans, and besides, more than 50% of the Mexicans in the U.S. are undocumented."

In the short-term, the peso/dollar exchange rate has a significant effect on remittances, as migrants wait for a more-favorable exchange rate before sending money home. The peso, which appreciated 8.6% against the U.S. dollar in 2012, in November was 5% stronger than in the year-earlier month.

BBVA said that it expects full-year 2012 remittances to be between 0.5% and 2.5% lower than in 2011, and that they will grow between 1% and 3% in 2013.

"Given that the level of employment of Mexican immigrants in the U.S. appears to be lower, and that this is the variable that determines the long-term trend in remittances, it's foreseeable that remittances will also be lower and that it will be difficult, at least in the next two years, to reach the all-time highs seen in 2007," BBVA added.

Despite the slowdown in the second half of 2012, remittances remain a significant source of dollar inflows into Mexico, ahead of foreign tourism and foreign direct investment.

Inflows from foreign tourists totaled $10.3 billion in the first 10 months of 2012, according to central-bank data, while foreign direct investment totaled $13 billion in the first nine months of 2012.

Write to Anthony Harrup at anthony.harrup@dowjones.com.

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