MercoPress. South Atlantic News Agency

Mexican remittances rose in September at fastest pace in five years

In spite of US unemployment and record deportations Mexican don’t forget their families

Mexican remittances rose at the fastest pace in five years in September as immigrant workers took advantage of the Peso’s decline to send more money to relatives, according to the Mexican Central bank.

Even as economic growth slowed in the US, money sent back to Mexico rose 21% to 2.08 billion dollars in September from 1.72 billion in the same month a year earlier, the central bank said. Remittances had not soared as rapidly since October 2006, when they shot up 24%, central bank data show.

While the US unemployment rate is over 9% and more undocumented immigrants are being deported this year than ever before, that hasn’t stopped Mexican workers from sending more money to their families to take advantage of a cheaper peso, said Delia Paredes, chief economist at Banorte-Ixe. As more Mexican workers move into better-paying jobs, that also boosts their spending power, she said.

“Despite the fact that the construction sector remains very weak, the workers are moving into the service sector,” Paredes said from Mexico City.

The Mexican Peso has weakened 14% against the U.S. dollar since August first.

Mexico economists estimate that the currency will end the year at 12.96 pesos per dollar, according to a monthly central bank survey published earlier this month. The survey showed economists lowered their 2011 growth estimate for a fifth consecutive month to 3.72% as the country’s recovery is hurt by a slowdown in the US that absorbs 80% of Mexico’s exports.

Economic growth will slow to 4% this year from 5.4% in 2010, the Finance Ministry estimated September 8. Budget bills passed by both houses of Mexico’s Congress last month forecast 2012 economic growth of 3.3%.

Economists in the Central bank’s monthly survey lowered their 2012 growth forecast to 3.24% from a previous forecast of 3.50%.

Slower global growth may lead Mexico’s central bank to relax monetary policy, according to the minutes of policy makers’ most recent meeting on interest rates, published Oct. 28. On the other hand, a sustained decline in the peso may fuel inflation and a more restrictive stance, the bank said.