A worker transports a bale of hay in New Mexico, USA. Sergio Flores (Bloomberg)
Two years ago, María Luisa Pérez was living comfortably on the $500 her daughters sent her from the US. With these transfers, she was able to pay for her house rent, basic services like electricity and water, and the groceries she bought at the supermarket. But gradually the Mexican peso appreciated against the dollar, reducing its purchasing power.
“The same $500 that used to live on me now only pays for rent and, if I try too hard, a week’s worth of food,” says the 58-year-old psychologist from her home in Morelos State. “I can’t believe that before the pandemic, I could go to the grocery store and spend 1,500 pesos to buy beef, vegetables and everything I needed to eat for up to two weeks.” Today I have 1,300 pesos just for cleaning issued. I couldn’t buy any food,” he shares.
Pérez is one of more than 11 million Mexicans hard hit by the Mexican peso’s appreciation against the dollar. The Mexican currency has appreciated nearly 15% since late July 2021 in an atypical episode as it historically tends to depreciate. However, over the past two years, several factors have converged to increase demand for pesos: an attractive interest rate differential on financial instruments, inflows of foreign direct investment, and an increase in remittances from US nationals to the US, all of which broke records under the administration of President Andrés Manuel Lopez Obrador.
In July 2021, remittances from Pérez totaled 9,934 pesos. Today it is 8,502 pesos. The difference is 1,431 pesos less in two years. Added to this is the increase in the prices of goods and services, i.e. inflation, which peaked in August 2022 at 8.7% per year. Despite the fact that it has improved (the last record was 4.8% in July). , continues to put pressure on consumers, especially when it comes to food. According to the National Institute of Statistics and Geography (Inegi), prices for processed food, beverages and tobacco increased by 9.8%. Vegetables such as avocados and onions have seen sharp price increases over the past month.
Pérez has made major changes in his eating habits and tries to offer therapy as much as possible. But there’s one thing she’s had to stop that’s weighing heavily on her: Sunday breakfast with her friends. “It might seem trite, but for me, living alone and not having family in Morelos, it was like soul food for a week,” she says.
More than 11 million Mexicans receive remittances from abroad, according to a 2022 estimate by the Center for Latin American Monetary Studies, a multilateral coalition of the major central banks in Latin America and the Caribbean. More than six and a half million of them are women, like Pérez. Remittances to Mexico totaled more than $60,804 million last year.
María Luisa Pérez Hernández is a Mexican woman who receives remittances from her daughters in the United States. Luisa Perez
For President López Obrador, that’s something to brag about. On several occasions, the President has shared the amounts transferred by his countrymen as a merit of his government. “Thank you to our immigrant compatriots,” he said on June 2, “this is a fundamental source of funding because it’s money that goes straight to families and the most remote, poorest regions of the country.” .”
Pérez’s voice breaks when he talks about his daughters living abroad. She hasn’t seen any of them since 2004, when Pérez left the US for good. “She lives there under the DACA program, so she cannot leave the country,” says the mother of the family. The Deferred Action for Childhood Arrivals (DACA) program protects nearly 700,000 young people who entered the United States illegally as children from deportation.
“The government is unaware of the pain families are suffering from the absence of our loved ones,” admits Pérez. His frustration is palpable. “They talk about how remittances are increasing like it’s a great achievement, and the truth is that remittances are a disgrace to our country,” because they show the lack of opportunity in Mexico, Pérez says.
Another factor in the Mexican peso’s winning formula has been the influx of foreign investment, which is expected to be a record year, according to preliminary data reported this week by the Commerce Department. In the first half of the year, foreign companies invested $29 billion, most of which came from an investment of domestic profits.
When the country’s economy is doing well, it hasn’t affected people’s quality of life, says Yaniré Zamora, 52, who also receives remittances from her husband in the United States. A chemical engineer in the coastal state of Quintana Roo, her income as a university professor earns an average of 9,000 pesos per month and fluctuates depending on the number of courses he is able to teach. On vacation, for example, you have no income. “Our savings are in dollars, which sounds nice, but it’s not anymore,” says the Mexican.
A year before the pandemic, Zamora and her husband, a yoga teacher who lives in the city of Boston, began building a small house in Cozumel. They didn’t expect their budget to be drastically reduced in a few years. “It’s just a room with a palapa roof. We’re super simple, we like the simple life,” he says. Construction took longer than planned due to inflation in building materials and the devaluation of the dollar.
“We still don’t have doors, but at some point we couldn’t keep building and couldn’t pay rent, so we came here. With next month’s rent, we’ll put a door in, but each time they cost more,” says Zamora. It’s very hard to live like this because you always have to ask friends to guard the house when she has to go out.
Yaniré Zamora, 52, poses at Benito Juarez Park in Cozumel, Quintana Roo (Mexico)Yaniré Zamora
Both Pérez and Zamora agree on one thing: if public services like health and transportation were better, the impact on their income would be less. This is consistent with the results of the Poverty Measurement Survey presented this week by the National Council for Evaluation of Social Development Policy (Coneval). Almost nine million people have been lifted out of poverty, but deficits have increased. In 2022, the proportion of the population with an educational gap and access to health services has increased.
“Public transport is bad and insufficient, so we use our bikes whenever we can, and if not we have to pay for a taxi, which costs a lot,” says Zamora. Although she has public health insurance, appointments last at least three months and medication is not only not free but also in short supply.
Pérez, who suffers from congenital kidney disease, had to see his specialist because he can no longer afford it. “Now I went to the doctor in the Sparkasse pharmacy because it didn’t reach me. I have to set priorities. Either I buy groceries or I pay the electricity or water bill,” he says.
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