Buoyed by Recovery, Migrants Send Home More Money

Miriam Jordan and Paulo Trevisani, Wall Street Journal, March 14, 2011

Immigrants from most Latin American countries sent home substantially more money at the beginning of 2011 than they did a year earlier, signaling the economic recovery in the U.S. and other developed countries has improved prospects for foreign workers.

Guatemala, Honduras, El Salvador and Mexico received between 6% and 16% more revenue from remittances in January than in the same month last year, according to the International Fund for Agricultural Development. The exception was Brazil, which experienced a 3% decline, said the U.N. agency.

Funds remitted to Latin American countries rose 6% and 16% in January, compared to the year-earlier month.

The January figures, coupled with 2010 data to be released Monday by the Inter-American Development Bank, confirms the end of a downward trend in remittance flows, which had tumbled 15% between 2008 and 2009 as the recession took its toll.

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The funds channeled home by immigrants are critical to their families and to many developing countries, where remittances exceed foreign direct investment, provide hard currency for government acquisitions and help spur economic growth.

The purchasing power of remittances has weakened, however, for families in countries where local currencies have appreciated against the dollar.

Currencies in Latin America gained 4.4%, on average, against the dollar during 2010, according to the IDB report. In particular, “the appreciation of the Brazilian real and the peso in Colombia makes a big impact on people receiving remittances from the United States,” said Robert Meins, a remittance expert at the IFAD.

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In Mexico, the appreciation of the peso and inflation have also adversely affected recipients of remittances, but to a lesser extent than in Brazil and Colombia.

In January, remittance flows to Mexico jumped 5.8% over the same month in 2010, and the average value of each remittance rose nearly 1% to almost $300 compared to January last year. Once the remittances were converted into pesos and inflation was discounted, their real value shrunk by 3.2% in January relative to the same month last year.

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