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Weak Dollar Drives Remittance Surge

New America Media, News Report, Viji Sundaram Posted: Apr 04, 2008

Editor's Note: The slowdown in the U.S. economy -- rising fuel cost, the weak dollar and the housing crisis -- is negatively impacting millions of immigrant workers who send hundreds of billions of dollars to their home countries each year. Viji Sundaram is an editor at New America Media.

OAKLAND, Calif. Ever since he migrated to the United States 10 years ago, every month Jagwinder Singh has been sending money back home to his 70-year-old widowed mother in Jalandhar in the state of Punjab in India.

With the $300, she would buy herself much-needed medicines, clothes and give a little of it to her younger son, still out of the workforce. Without it, it would be undeniably tough to survive on the widows pension she gets from the government.

But for the last two months, Singh has been barely able to send any money back home because no matter how hard he tries to cut down on his expenses, hes just not able to save any money. Singh is yet another victim of the slowdown in the U.S. economy.

I feel sad, Singh, 35, and the father of a two-and-a-half-year-old son and a one-year-old daughter said on a recent day as he leaned against his truck in a parking lot near the Port of Oakland. I dont have money, and my mother needs medicine.

Singh is among the thousands of immigrants from India who has been contributing to his homelands income from remittances, the money that migrants send home. According to a recent World Bank study, of all migrant workers around the world, only Indians send home more money ($27 billion). At $26 billion, China is the second-highest beneficiary of remittances, while Mexico comes in third, with $25 billion.

With its nearly 40 million immigrants, the United States is by far the largest source of outflows. Global remittances exceed $300 billion per year.

But for the first time in nearly a decade, the increase in the amount of money sent back home from the United States is growing at the slowest rate, according to the Inter-American Development Bank (IDB). IDB blames the decline on the turndown in the U.S. economy.

Analysts say the trend may not dramatically affect the overall economic scene, but it is sure to impact many families in developing countries, most of whom use the money to survive, not to save.

For families in Mexico, analysts say the decline in remittances could be traced to the downturn in the U.S. construction sector, where many Mexican immigrants work.

Life is tough, said Mexico-born Jesus Hernandez, who waits outside the Richmond, Calif., Home Depot with dozens of other Hispanic immigrants waiting for a vehicle to pull up, its driver looking for a day laborer. There was a time when the wait was no more than an hour or two. But now, on most days, its no job, no money, Hernandez said, as he pulled his paint-stained baseball cap over his head.

Another reason so many immigrants find themselves frequently jobless is because the anti-immigrant climate is deterring employers from hiring immigrants.

In Singhs case, the rising price of diesel fuel has cut deep into his income. Like truckers nationwide, Singh has been spending a huge chunk of his income to fuel-up his 18-wheeler.

Currently, fuel is 50 percent of our expenses, asserted Bill Aboudi, owner of the Oakland-based AB Trucking Company. Aboudi owns 13 trucks.

Diesel prices have gone up more than a dollar over the last year, and are expected to climb even more, according to the U.S. Energy Departments Energy Information Administration. This is going to further affect the bottom line for truckers like Singh.

Even as it is, I spend nearly $5,000 a month on fuel, said 38-year-old trucker Balhar Singh no relation to Jagwinder as he pulled up in his truck near a fast food roadside stand near the Port of Oakland.

The San Jose, Calif., resident said that until a year ago, he used to send about $15,000 a year to his elderly parents, two sisters and a brother back in his native Punjab, but of late he has been able to send no more than $8,000.

My parents dont work, they depend on me for their income, said Balhar, the father of three children aged ten, seven and five. But what am I to do?

The weakening of the U.S. dollar against the currencies of many nations has increased the remittance flows from the United States, a large part of it simply to preserve the purchasing power of recipients, according to the World Bank. Remittance flows to the Philippines, for example, increased by nearly 50 percent between 2004 and 2007.

The rising cost of living in India, in addition to the slipping value of the U.S. dollar against the Indian rupee currently around 39 rupees to the dollar compared to 53 rupees to the dollar three years ago should translate into a stronger remittance flow to the country, analysts say.

But the way things are going (here) in America I cant send any money back home, Jagwinder Singh said.

There was a time when business was good and I could clear $4,000 a month after expenses. Thats not the case any more.

Related Media:

Western Union: Stealing So Much More Than Money

Americans Hardest Hit by Subprime Crisis

Mexicans Send Less Cash Home, Bad News For All




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