You might have been wondering why your dollars convert to less amount of Peso these days compared to some years ago.  Normally it should be a good sign because a strengthening Peso is an indicator that the Philippine economy is doing better but back home you do not see any signs of expected improvement. 

According to an article from the Inquirer, the Philippines may be suffering from “Dutch disease” – an economic malady that sees the decline of local industries and fuels an overvalued peso.  This is driven by the enormous remittance from OFWs that amount to about US$18 Billion last year alone.

Ironically, the same OFWs who are remitting dollars back to their home country are the first ones affected with the phenomenon.  Their dollars don’t translate to as much pesos as from 1997 when the dollar exchange rate was in the P50.00 to a dollar range.

This phenomenon is also killing our domestic and export industries as the exchange rate is making their products more expensive compared to imported products.

To address this issue, the government and the business sector should focus on job creation and a more competitive exchange rate as the Peso is overvalued by about 20%.

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