OFWs hurt by strong Philippine peso
|Overseas Filipinos continue remittances despite fluctuations in exchange rates|
LONDON - The rising value of Philippine peso is shaking up the finances of overseas Filipinos, who are now faced with lower exchange rates and rising prices of exports.
The Philippine currency showed signs of strength in November reaching a peak of P40.87 against the US dollar, its highest value since 2008.
In the UK, the British pound is also down against the peso by 3.92% in the past year, decreasing to an average rate of P65 per sterling.
"I’m happy to learn that the Philippine economy is going strong. It’s great news for the business sector. Investors will have more confidence to invest in the country and that will help in terms of economic growth," said Bernadette Baranda, a Filipino social worker in the UK.
Yet despite its positive implications, Baranda said there are adverse effects of a strong peso on the lives of Filipinos abroad, especially on remittances.
“It affects overseas Filipinos because if the exchange rate is low, it means we have to send more money. And it can be hard because our salaries remain the same, and, even though we earn pounds, we also spend pounds here in the UK,” she said.
Albert Rosales, a London hospital worker originally from Caloocan City, added: “The low exchange rate has a big impact for us because it shrinks the money we send back home.”
He also revealed that he bears the brunt of the fluctuations by sending more money to the Philippines to maintain the same level of income expected by his family back home.
“I just end up sending more money. I’m the one who adjusts, because if I don’t, my family will have less money in their pockets, and I wouldn't want them to suffer,” he explained.
Philippine exports are also said to be affected, with the strong peso pushing up prices of Filipino food imported by Pinoy supermarkets abroad.
“We spend less and buy fewer goods because we’re tying to save money. The low exchange rate really has a strong effect on us. It’s hard here. I think it might be better to be in the Philippines right now with the economy so strong. Here, we just work harder and harder to sustain our remittances back home,” revealed Joseph de los Santos, a nurse in the UK for 11 years.
Despite diminishing exchange rates, OFW remittances continue to flourish. As of September 2012, overseas Filipinos have already sent $17.3 billion to the Philippines, with more transactions expected over the Christmas period.
“The strong peso doesn't really affect the volume of remittances. What we have noticed is that Filipinos chase the amount they send. So if, let’s say, they send P20,000 regularly, they will continue to send that exact amount regardless of the exchange rate,” observed Noel Munoz from MyRemit, a remittance company in London.
In 2011, remittances from overseas Filipinos amounted to a record level of $20 billion, a major source of income for the Philippine economy, which stayed relatively stable amid the global financial crisis.
"I’m grateful that we can help the country by working abroad and sending money back home. It’s good for the economy, and especially for the very poor," said Delia Lachica, a veteran nanny and housekeeper in London for over 10 years.
Lachica, who also has relatives working in Dubai and Kuwait, added: "People in the Philippines always say life is hard. But life is also hard abroad. We work so hard, and if we don’t, we fail everyone. That’s why I tell my family to also go out and earn money for themselves, to work just as hard as we do abroad so they don’t just rely on us.”
The Philippine economy is expected to grow by 5.9% by the end of 2012, due to a number of factors including a surge of remittances for the holiday season, sustained levels of foreign investments, stable inflation, increase in government spending, improvements in global economy, and a strong local currency.
"I’m so happy for the Philippine economy. If this trend continues, I might just go back home so I can be with my family and friends,” said Josephine Tagaytayan, a domestic worker in the UK.
Rose Cortez, a student who also works part-time, said: “I’m so happy for my friends in the Philippines. Most of them have a job and everything seems to be okay for them.”
And despite concerns from certain sectors, reports suggests that the currency and economic growth are currently sustainable and generally in line with regional trends in Asia. South Korean won and Taiwanese dollar, for instance, strengthened alongside the peso.
But Bangko Sentral ng Pilipinas (BSP) remain cautious and watchful of the trends, ensuring that the rate of growth and its implications remain manageable for all stakeholders.
“It has not escaped us that the peso has been appreciating faster than others in the region, but let me make it perfectly clear – our enhanced tool kit is deep, and we certainly have the policy space to make adjustments to our stance and act swiftly - if the dots don’t fall into place or if the stresses go out of hand,” said BSP Governor Amando Tetangco Jr. at the Bloomberg Foreign Exchange Summit 2012 held at Shangri-La Makati at the end of November.
Forecasts continue to look favorable for the Philippine economy in the near future, with JP Morgan naming it as one of three top Asian markets for 2013, alongside Thailand and India.
According to Business Mirror, currency traders from Banco de Oro are also expecting the Philippine peso to remain strong, potentially reaching a high of P38.50 against the US dollar within two months.