Remittances flowing into Mexico are the second highest income in Mexico - second to value of oil. Remittance money never sees the U. S. economy. It is insanity on steroids,

 

‘Muchas gracias’ for all those remittances

By Silvio Canto, Jr. www.americanthinker.com

Today I learned that the peso is strong. That's actually a double-edged sword because it makes Cancun more expensive for U.S. tourists but going shopping in the U.S. cheaper for Mexicans.

So what's going on? Well, remittances are going south and that makes the Lopez-Obrador government say "muchas gracias" to all those Mexicans in the U.S. keeping their families afloat. This is the story:

On Monday, April 8, the Mexican peso reached an international exchange rate of 16.31 pesos per one wholesale U.S. dollar, the currency’s strongest performance against the dollar since October 2015.

This marks a .68 percent appreciation of the peso since trading closed on Friday, said data from Bloomberg, making the Mexican peso one of the top four global currencies in terms of growing value against the dollar over the weekend.

According to Banco Base Director of Economic Analysis Gabriela Siller, the increasing strength of the peso comes as remittances sent from the U.S. to Mexico continue surging, export levels remain strong and foreign investment rises throughout the country.

That's not a shock to me but the amount of "remesas" is indeed eye-popping. In other words, Mexico is attracting more investment, exporting a lot and growing more and more dependent on those "remesas" as a safety net for more and more families.

Remember that those "remesas" are going to the poorer segment of society. Very few middle or upper-class Mexicans get these dollars. At the same time, many Mexicans have told me that it's dangerous for Mexico to be so dependent on dollars. They say, and I agree, that local politicians do not have to make tough decisions about privatizing the oil company or the agricultural sector.

It also exposes Mexico to having the U.S. put a tax on all that capital flight. We believe that President Trump warned Lopez-Obrador with such a tax and that is why he accepted "Remain in Mexico." True or false, those levels of dependence on foreign nationals abroad is risky and no way to run a country. Just think what the peso would be worth if $60 billion was not flowing into Banco de Mexico.