Sunday, November 06, 2011

Remittances and the exchange rate

I've been spending a lot of time explaining to my Latin American Politics class why exchange rates matter. Here is an interesting example of how they affect remittances:


Migrants living in the U.S. are sending more money home to take advantage of the weakening peso, which slid to a more than two-year low on Sept. 23, said Sergio Luna, chief economist at Citigroup’s Banamex unit. Historically more than 95 percent of remittances to Mexico come from the U.S., according to the Washington-based Inter-American Development Bank. 
“It would seem to signal that they’re making an effort to send resources, given the advantage in the sense that a dollar is buying more pesos,” Luna said in a telephone interview. “In a certain sense, the migrants are hedging. Perhaps they’re taking advantage of an arbitrage opportunity. At the end of the day, this should serve to limit the effect of depreciation of the peso.”


We had been hearing for a few years about remittances flattening out, but earlier this year they picked up again so sustaining this is good news. Of course, in addition to being a reflection of the exchange rate, remittances are a reflection of the U.S. economy:

The surge in remittances indicates more Mexican workers in the U.S., particularly in the construction industry, are finding work, said Alfredo Coutino, Latin America director at Moody’s. Construction spending in the U.S. increased in September for a second month after reaching an 11-year low in March, a Commerce Department report showed on Nov. 1. The U.S. economy, the destination of about 80 percent of Mexican exports, expanded at the fastest pace in a year in the third quarter.
What it also likely means is that we will see an uptick in border crossings, both legal and illegal.

1 comments:

Vicente Duque 3:36 PM  

This is Off-Topic - But is super important :

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VIDEO, Details of military operation that killed FARC leader Alfonso Cano in Colombia - Comments in YouTube.com are very harsh - Think Tanks in the USA recommend the same strategy in Afghanistan - Is this realistic ??

The Colombian Government has been very successful killing the Top Terrorists in Colombia, FARC has been supported by Hugo Chavez during many years. There has been a successful combination of American Airplane and Communications Technology and the bravery and valor of Colombian Soldiers, three of them died of extreme cold during the persecution ( under freezing temperatures of 20 degrees fahrenheit, which is -7 in the Celsius Scale ). Two others fell off a cliff.

The idea of using the same Ideas in Afghanistan may be invalid. Because 90% plus of Colombians strongly hate the FARC, and 99% believe that FARC will never reach power or get a good settlement in this conflict. This according to serious polls, like Gallup Polls and others.

I believe that Afghans are very brave and intelligent. But Colombians are more amenable to the Americans Soldiers, Officers and Strategists, this is they are more accustomed and Responsive to American advice, they are more willing to accept American Suggestions and they have lines of authority very disciplined and serious that are similar to those of Americans.

Some military operations of the Colombian Army are an example for the rest of the World to study and probably follow.

You can not think that Colombia is Afghanistan, respecting the excellent things of both countries. Don't mix apples and oranges, even if both taste good.



Uploaded by newsntn24 on Nov 5, 2011

Bogota, Colombia - Information from a former FARC fighter helped leader the Colombian military to FARC leader Alfonso Cano´s jungle hideout in the south of the country Friday.



Details of military operation Odiseo that killed FARC leader Alfonso Cano



http://www.youtube.com/watch?v=DxVmxoHgYlk


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