LA SAUCEDA, Mexico — Thanks to the generosity of Guanajuato’s sons and daughters living in the U.S., Adrian Robles Aguillon has added coconuts to the mangoes and watermelons he sells at his fruit stand.
His optimism, though, is dampened by a troubling sign: People have less pesos to spend these days.
“We all need remittances here. They lift everyone,” said Robles. His family in North Texas and Austin sends a steady flow of dollars monthly to this town, located between San Miguel de Allende and the state capital of Guanajuato.
The money “spreads all over the community and helps businesses stay afloat,” he said. “But I notice people are spending less, and that’s worrisome.”
Blame the worries on the so-called “super peso,” which in recent months has gained on the dollar.
The generosity via remittances — the money migrants abroad send home to their relatives — remains steady, even rising.
But the overall value of dollar has fallen steadily.
Greenbacks nowadays buy just under 17 pesos to the dollar, appreciating more than 20% from a year ago in July.
The super peso is affecting remittances and exports — and retirees and tourists who suddenly realize their once mighty dollar doesn’t go as far these days. Last December, for example, the peso was about 19.50 to the dollar, compared to 16.90 last week.
Last year, remittances from the U.S. to Mexico grew to about $61 billion in 2022, a new record, according to Mexico’s Central Bank. That surpasses other sources of the country’s foreign income, including tourism and oil exports.
Globally, Mexico is No. 2 as the highest remittance-receiving country, second only to India, according to the World Bank.
“Overall, remittances have gone up 10% in the first six months of the year; 12% just in the state of Guanajuato,” said Juan Hernandez, secretary of migration and foreign affairs for the state of Guanajuato.
“But are Mexicans concerned that the dollar is not giving them as many pesos as before?” he asked. “Sure they are, and this only adds to worries that the economy is volatile.”
Hernandez, who this week is leaving his post to help Mexican senator and presidential hopeful Xochitl Galvez, divides his time between Guanjuato and Fort Worth. “You have paisanos in the United States now trying to send more and more money to keep up,” he said.
Ripple effects
The ripple effects of the super peso are felt strongly in communities like La Sauceda — communities that are deeply intertwined with the economy of Texas, particularly North Texas.
Immigrants from five Mexican states — Guanajuato, San Luis Potosi, Zacatecas, Durango and Michoacan — dominate the Mexican and Mexican American populations of North Texas.
Anywhere from 200,000 to more than 300,000 Guanajuatenses call North Texas home, making it the biggest population in the state of Texas, said Francisco de la Torre, Mexico’s consul general in Dallas.
“Any blip on the value of the dollar has huge effects back home,” said Tereso Ortiz, longtime head of Casa Guanajuato in Dallas, a non-profit organization. “Even though we’re on the U.S. side of the border, we are very much aware of the basic needs of our families in Mexico. We may be living in Dallas, but our hearts remain very much in Mexico.”
“The stronger peso is good news for the administration of Mexican President Andrés Manuel López Obrador,” whose term ends in 2024, said Rene Zenteno, a sociology professor and expert on immigration and Mexican politics at the University of Texas at San Antonio.
“The peso has gained in value in part because of heightened expectations around foreign investments known as “nearshoring” — companies moving from Asia to Mexico — and other large foreign investment projects like Tesla’s opening of an electric vehicle manufacturing plant in Monterrey, Zenteno said.
And then there is the return of tourism, after the COVID-19 pandemic shattered the tourism industry.
But the stronger peso is “not so good for families of immigrants who depend on the remittances, or for U.S. tourists who find that their dollar doesn’t go as far anymore,” Zenteno said. “This is a very unique situation in the recent economic history of Mexico.”
Moreover, he said, a strong peso means that, in the long run, U.S. consumers will end up paying more at the supermarket for imports like avocados.
Peso’s strength
“Although the 2023 peso gains against the dollar mean that dollar remittances will not go as far once converted into pesos, it is a good problem to have,” added Tom Fullerton, an economics professor at the University of Texas at El Paso. “That is because the peso’s strength reflects good performances in several key areas,” led by nearshoring.
And as long as the U.S. economy continues to do well, Mexicans abroad will continue to send remittances home.
In May, Mexico brought in close to $5.7 billion in remittances, according to Mexico’s Central Bank.
But as Mexico and the U.S. enter presidential elections in 2024 — Mexico next June and the U.S. in November — uncertainty looms. Anxiety is reflected among the residents of La Sauceda, a community of more than 4,000 people whose livelihoods depend on tourism and artistic work with wood, glass and ceramics.
“I’ve worked hard to expand my fruit stand,” said Robles. “But our destiny depends on the well-being of both countries… I pray to God (that) people continue supporting me.”
Back in Dallas, Ortiz notes that a strong peso is just one of the challenges facing immigrants. Last fall, he said, he made one of his quarterly trips to his hometown of Ocampo, Guanajuato, when he was robbed at gunpoint by members of organized crime.
They told him they, not the government, owned the highway. He was robbed of everything, including items he was taking back to his hometown from North Texas. Since then, Ortiz, 74, continues to make his quarterly treks back home. But he does so now by plane.
“We as immigrants, the sons and daughters of Mexico, are targets because of our dollars,” Ortiz said. “We fall and rise, depending on the value of the dollar.”
