Overseas Filipino Workers Remittances Down
ABS-CBN News is reporting that remittances are down sharply. The Philippines economy gets a huge boost to its economy from Filipino that work overseas and send money back home to their relatives.
The Philippines National Bank feels that remittances could fall as much as 
9%. A firm in Austria that handles remittances to the Philippines believes that the fall will be as much as three percent in that country.
This means fewer dollars and Euros will be in circulation in the Philippines. Of course, that means the supply of dollars and Euros will fall. That should translate to a higher value for dollars and Euros vs. the Philippine Peso. Usually, a higher exchange rate for the Expat is good for both the expat and the Filipino.
However, Bangko Central Ng Pilipinas (the Philippine Central Bank) may protect the peso and prevent its decline. If exports from the Philippines fall enough, a higher value on the dollar might be good for the Philippines as it would stimulate more internal spending. It depends to a large part on what the central bank in the Philippines tries to do.
If the goal is to increase net exports increasing the value of the dollar would help accomplish that. The lower value of a Peso would buy fewer American goods and make it easier for American’s or Europeans to buy Philippine goods. The USA and other countries may try to push down the value of their currencies in order to get exports up. The dollar has been rising against the Euro.
The USA is complaining about China manipulating its currency’s value, forcing the value up so one would think that the USA wouldn’t manipulate its own currency while complaining about another countries monetary policy. The Chinese deny it. Surely the USA wouldn’t do the same thing. Well, I’m sure it would under the Bush Administration. Hard to imagine any administration not doing all it could to protect the American economy.
With the rate of inflation falling in the Philippines, an increase in the value of dollar or Euro would be very beneficial to the expat that earns money in those currencies.
Yesterday, the American Dollar closed at P47.8216 to 1 USD. Still not much change, slightly upward but nothing I would call a trend. Still, holding steady is not a bad thing for me. P39 scares me a little, that made life much harder than it is now. The Peso was around P41 this time last year and fell to P39 before it began to rise again.
Expats always benefit from a favorable exchange rate.
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Hi Rusty- Interesting! I have read a number of articles in the past week that OFW remittances were surprisingly UP. This was reported by ABS-CBN, Business World Online and the Philippine Star.
As a matter of fact, ABS-CBN reported that OFW remittances were up 31% for 2008. ABS-CBN went on to say that in Dec. 2008 were up $1.4 Billion.
Here is a link to the article:
http://www.abs-cbnnews.com/business/02/16/09/ofw-remittances-hit-164-b-2008
I got my story from several sources and I don’t usually put links, just refer to the source as I did in my post. Since you posted a contrary link I thought I should put one showing information backing up what I had to say:
http://www.abs-cbnnews.com/pinoy-migration/02/17/09/global-financial-crisis-affects-pinoy-remitters-austria
Perhaps the rate of increase has fallen? I found another article saying exactly that. Gonna go read the article again.
Nope, this was for January, not December which was up only .08 percent down from double digit growth in remittance the year before.
Perhaps the drop in January is worse than expected. The entire picture is not in. One country reported and the National Bank seems to be confirming it across the board. But the numbers have not been tallied yet.
Hi Rusty – But, January is still an increase in remittances… just a smaller increase compared to last year. As long as it keeps increasing, that is good for the Philippine economy, right?
An increase is good but that’s not in agreement with the information I found and from the same source?
An increase doesn’t man sense to me with what is going on around the world. Also, An increase slower than the rate of inflation is a net decrease in real dollars. I saw an increase in December. I didn’t see an increase in January. And the increase in December is defiantly below the rate of inflation unless the .08 is adjusted for inflation.
The main point of the story was what the effect would be, not the facts but the facts I stated are still just as valid as what you said but you’re talking about last year. I’m talking about this year.