Mexico's 'super peso' puts squeeze on US remittances
By Lizbeth Diaz and Noe Torres
TLAXCALA, Mexico (Reuters) — Mexican mother-of-two Adriana Sanchez frets the $300 or so a month her husband sends from the United States will no longer cover family expenses as a sharp appreciation in the peso currency and nagging inflation crimp her budget.
Mexico now takes in nearly $60 billion a year in remittances, mostly from the United States, making them a pillar of household spending in a country that is now one of the biggest beneficiaries of cash transfers worldwide.
But emergence of the phenomenon known as the «super peso» means those dollars no longer go as far as they did.
Lifted by higher central bank interest rates, as well as the relocation of manufacturing capacity to the region from Asia — a trend known as nearshoring — the peso has risen by over 14% against the dollar this year, outperforming international peers.
The 39-year-old Sanchez, who lives in the central city of Tlaxcala east of Mexico City, said she recently tightened her purse strings: she does not go out with her children as much, and buys less meat for the family.
«As much as I try to stretch (the money), it's not enough now,» she said, worrying about how she will provide for her children in the coming school year.
HITTING LOW-INCOME FAMILIES
A year ago, the currency was trading at around 20.40 pesos per dollar. On Friday, it hit a 7 1/2-year high to trade at 16.63 pesos per dollar.
President Andres Manuel Lopez Obrador has plowed billions of extra dollars into social support programs and urged his compatriots to keep sending greenbacks to Mexico, helping make consumer spending a bulwark of growth since the pandemic ended.
But pressure on remittances will squeeze poorer households.
«The purchasing power of
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