The financial sector is a very interesting creature when taking all things into consideration. Despite presidential candidate Donald Trump threatening to cut off remittance cash flow from the US to Mexico, it appears that more Mexicans are receiving cash than ever before. In fact, the number of transfers has increased by as much as 25% in 2016 so far.
One Does Not Stop Remittance With Idle Threats
When people flap their gums, some fascinating comments come out now and then. In the case of Donald Trump, he threatened to build a wall around Mexico to make sure no money could enter the country from the US side of the border–a bold statement that not only costs him brownie points with the public, but is also utterly ludicrous.
To make matters even worse, the number of remittance transfers from the US to Mexico has trumped last year’s numbers. In fact, there are roughly 25% more transfers taking place this year so far, and there are still more than two months left in the year. Do keep in mind that halting remittance from the US to Mexico would lead to a civil war, which is the last thing the US needs right now.
There is another reason for the increasing number of remittance transfers, though. One US Dollar simply buys the recipient more pesos than last year due to fiat currency fluctuations. While that may not be the most prominent reason for sending money across borders, it is an interesting development to keep in mind.
When everything’s said and done, the remittance industry is vital to the Mexican economy. Given the slow economic growth in the country and the low oil prices, things are not looking all too stable in the Latin American country. Add a fair share of political turmoil to the mix, and it is not hard to see why every US Dollar is more than welcome.
The correlation between fiat currency value and politics could not be more clear in this case, though. The Mexican peso is fluctuating based on how the presidential election is shaping up. Any popularity boost for Trump will send the peso value downwards, whereas the opposite effect occurs when things go right for Clinton. Either way, neither of these candidates will be a blessing for the American people, though.
Even if Trump were to become president of the US and block remittance to Mexico, there are plenty of ways to route around this problem. Bitcoin, for one, would not be hindered by these artificial blockades by any means. Using precious metals is another alternative, albeit one that can lead to logistical nightmares, depending on the quantity.
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