In general, when you place refugees in camps, I don't believe it reduces xenophobia. It increases it. When the local population sees migrants receiving aid and not contributing to the society, and being a drain on international and national resources, then xenophobia tends to rise.
In general, I am in favour of allowing migrants and refugees an opportunity to work, to receive resident status if possible—even temporary residency status—and start providing for themselves and their families, as opposed to being idle in refugee camps and being susceptible to diseases that are often common in camps.
With respect to Central Americans, they've currently found a stadium and some of them have been recently resettled to a shelter. At the present moment, they do not have the right to work. However, Mexico does have a one-year humanitarian status visa. Refugees also have the right to apply for refugee status. When they apply for refugee status, they are granted the right to work, and this is a much better approach than keeping them in refugee camps.