Summary: If you’re curious about whether the billions in remittances sent by Mexicans abroad seriously shift the peso-dollar exchange rate, you’re in the right place. In this deep dive, I’ll explain — with hands-on details, real stats, and some personal mishaps — how remittances can impact the value of the Mexican peso. I’ll show what the central bank, expert analysts, and even some seasoned bankers say, and I’ll walk through an actual example involving local currency markets. Stick with me, especially if you’re interested in international finance or just want to figure out if remittances will make your next money transfer better (or worse).
A lot of folks I know, especially those with family in the US or Canada, worry about how “all the money coming in” might strengthen or destabilize the Mexican peso. Questions like: “Will remittances push down the dollar rate? Can they really help Mexico’s economy, or is that just political talk?” So, the core problem here: Do remittances really shift the USD/MXN exchange rate, and if so, how much?
Let’s start with the basic flow.
Imagine someone’s cousin, Arturo, is in California. Every month, he sends $500 to his mom back in Guadalajara via Western Union. Western Union collects US dollars — but his mom wants pesos.
According to Banxico (Banco de México) — which is the Mexican Central Bank — remittances are officially the second-largest source of foreign currency for the country, just behind exports. Banxico has a detailed monthly report on remittances (source), which shows how every dollar needs to pass through this currency conversion process.
Here’s where the numbers get interesting (and sometimes controversial). According to Banxico, remittances to Mexico hit a record $63.3 billion USD in 2023 (Reuters: Banxico Data).
To put that in context, let’s compare it to other typical currency sources and outflows:
Personal Experience: I remember a month when my own family received a remittance and the peso actually appreciated that very week; I wrongly assumed the two were cause and effect! After digging through official reports, though, it became clear there’s more at play — including speculation, government policies, and global risk moods.
Given these massive inflows, you’d expect a constant strengthening of the peso, right? But that’s not exactly how it pans out.
According to a study published by the Center for Global Development (Direct Link), remittances do exert a “mild but persistently positive” effect on the peso’s real exchange rate, meaning they can help prevent depreciation when other factors are negative.
Yet, day-to-day, the USD/MXN is dictated more by:
So even if a record $5 billion comes in over a month, a sudden announcement by the US Fed, for example, can swing the peso more than all those remittance flows.
Banxico explicitly tracks the effect of remittances on the peso-dollar rate. In one 2022 presentation (“Efectos Macroeconómicos de las Remesas,” by Guillermo Benavides, Banxico economist; PDF source), the central bank noted:
“Remittances are a relevant stabilizer, cushioning shocks and sustaining the peso’s level when export income falters.”But even Banxico concurs: other short-term factors dominate the FX market in the short run.
Just for fun — and learning — I once tracked the peso’s movement over a month coinciding with Mother’s Day, one of the peak remittance periods.
| Country | Remittance Law/Basis | FX Certification (Verified Trade) | Oversight/Enforcement Body |
|---|---|---|---|
| Mexico | Ley de Instituciones de Crédito (Banking Law), Banxico circulars | Banks/MTOs must prove origin and convert at prevailing rates; Banxico audits | Banco de México, CNBV (banking regulator) |
| USA | Remittance Rule (Regulation E, CFPB) | Sender receives pre-disclosure of FX rate; must match actual payout | CFPB (Consumer Financial Protection Bureau) |
| EU | PSD2 (Payment Services Directive) | Remittance FX rate disclosed and documented | ECB, National Supervisors |
| Nigeria | CBN Remittance Guidelines | FX payout at I&E window rate; strict documentation | Central Bank of Nigeria |
As you can see, the central bank (or equivalent) always plays a key role, and “verified trade” (i.e., ensuring the FX rate isn’t manipulated and funds are traced) is prioritized, sometimes even more so than with big capital flows.
A few years back, there was a mini-scandal: a US-based remittance provider was accused by Mexican regulators (CNBV and Banxico) of marking up the exchange rate more than permitted, essentially giving Mexican recipients fewer pesos per dollar than advertised. The US firm cited US regulations, claiming full pre-disclosure, but Mexican auditors pushed for penalties citing stricter “transparent settlement.” After some back-and-forth (including formal communications, which you can check in Banxico’s 2021 compliance bulletins here), the company was fined in Mexico, had to reimburse, and Mexico clarified “verified trade” meant using transparent, real-time FX rates, not just US-style pre-quote.
This shows how “verified” means different things in practice; the cross-border friction is real.
I once asked a regional treasury head at a major Mexican bank (anonymous for obvious reasons), “Do big remittance surges make your FX risk team nervous?” His answer: “Not really. They help build steady demand for pesos. But we plan for it. What really worries us is an unexpected global event — not so much the predictable rhythm of remittances.”
With years working in finance and cross-border payments — and a family tied to both sides of the border — I’ve tested every money transfer app you can think of, from Wise to Xoom to the neighborhood remesero. Once, convinced the peso would strengthen at Christmas (huge remittance season), I delayed a transfer — but the peso tanked because US interest rates popped, wiping out any “remittance effect.” Lesson: yes, remittances matter a lot for Mexico’s current account, but if you want to guess the dollar rate, watch broader financial flows and global risk appetite. Remittances smooth things out — they rarely dictate the trend.
If you want the technical breakdown, the World Bank’s Remittance Prices Worldwide portal offers detailed charts and a breakdown by country and service (worldbank.org).
For a hands-on simulation: Open your remittance app and check the actual FX rate quoted versus the “mid-market” rate at XE.com or Banxico; you'll often see a small spread, which is both the provider’s profit and a buffer for volatility. It's an easy way to see “verified rate” mechanics live.
Wrapping up, here’s the honest answer:
As always, take any “remittance = strong peso” claim with a grain of salt — and check your rates before you transfer. The international currencyscape is much messier than the political slogans let on.