Remittances to Mexico hit record of nearly $5.4 bln in October

Mexican President Andres Manuel Lopez Obrador has forecast that remittances will reach $60 billion by year end. Goldman Sachs' Ramos forecast that remittances could plateau in coming months.

Remittances to Mexico reached a record-high of $5.360 billion in October, an increase of 11.2% from the same month last year, Mexican central bank data showed on Thursday.

The sum, which surpasses the previous record of $5.301 billion in remittances sent in July, marks the sixth consecutive month of inflows over $5 billion. Remittances to low and middle income countries have surged this year on the back of a strong U.S. dollar and resiliency of the U.S. labor market.

"Generous wage/income support fiscal transfers in the U.S., a competitive MXN/USD level, and a deep contraction of activity and employment in Mexico have acted as both push and pull drivers of dollar remittances from the U.S. to Mexico in 2020-21," Alberto Ramos, head of Latin American research at Goldman Sachs, wrote in a note. The average amount in remittances sent in October was $385.

Remittances in the year through October rose 14.6% year on year to $48.338 billion, the central bank said. Mexican President Andres Manuel Lopez Obrador has forecast that remittances will reach $60 billion by year end.

Goldman Sachs' Ramos forecast that remittances could plateau in coming months. "The moderating activity and income growth profile in the U.S. and high base for remittances in 2021 should lead to a moderation in remittance flows into Mexico in coming quarters," Ramos said.

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