In essence, the lower value of the US dollar slows down remittances (OFWs holding on to their dollars instead of sending them to the Philippines), thus less cash-in-hand with OFW families, and less money available for consumer spending, saving or investing (in real estate, for example).
A study warns that this may have an adverse effect on the Phlippine economy.
“The monthly growth numbers of OFW remittances bear watching as this may indicate whether the feared recession in the US is beginning to have an impact on the money flow from overseas Filipinos,” brokerage house Philippine Equity Partners, Inc. said in a research note.
Source: BusinessWorld Online
What should OFWs / OFW families do?
Here are some views I’ve picked up from my reading and conversations with colleagues.
- Invest in US dollars instead of in Pesos. Premise is: the US dollar is still historically a stronger currency than the Phlippine peso.
- Invest in the Euros which is currently a stronger currency than the US dollar.
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6 users commented in " Slowdown in OFW remittance growth affects spending in the Philippines "
Follow-up comment rss or Leave a TrackbackI completely disagree. As most of us OFWs would send more foreign currency than the usual because we have to send a certain monthly for our families back home. I guess for someone who has migrated to another this may not be the case. But to a majority of Filipinos abroad, who are workers-send more dollars now than before. For example, we used to send 500 u.s. dollar a month to be able to get a certain Philippine peso amount,let us say 15k. Since the dollar value depreciated, we need to send or about 30 percent more to be able to meet the same philippine peso value.
Since the appreciation of peso does not translate to price lowering of basic needs. Instead certain commodities seems to raise the prices -we then have to raise the amount of our remittance.
Whoever, conducted the research may have reached only migrants who are abroad with their families as immigrant and not the majority we call OFW.
I completely disagree. As most of us OFWs would send more foreign currency than the usual because we have to send a certain amount monthly for our families back home. I guess for someone who has migrated to another country this may not be the case. But to a majority of Filipinos abroad, who are workers-send more dollars now than before. For example, we used to send 500 u.s. dollar a month to be able to get a certain Philippine peso amount,let us say 15k. Since the dollar value depreciated, we need to send or about 30 percent more to be able to meet the same philippine peso value.
Since the appreciation of the peso does not translate to lower price of basic needs. Instead certain commodities seems to raise the prices -we then have to raise the amount of our remittance.
Whoever, conducted the research may have reached only migrants who are abroad with their families as immigrant and not the majority we call OFW.
I think there are effects and results like these but the families of OFWs have their needs and no matter what the exchange rate is for the dollar, OFWs still have to send money back home, and with the ever growing number of filipinos working abroad, the amount of dollars sent to the philippines can only grow.
hi Ronald, jamezu,
You have very good insights here. I’m sure they are correct based on your first-hand experience. Thanks for sharing!
I think the article looks more at the Macro country-wide effect of the exchange rate. The US dollar has less spending-power now. With the spending power it used to have, that spending power went to real-estate investing (for example).
With less spending-power now, the crucial expenses are covered first and foremost (as pointed out by Ronald), with less “extra” spending power going to real-estate investing.
Key in the BW article, “see slower _growth_ in remittance inflows”. Yes, remittances will continue to rise, but not as fast as in 2007.
i did enjoyed reading all your insights..thanks it halp’s me more to finish my report with regards the effects of the weak dollar to the philippine economy..
i did enjoyed reading all your insights..thanks it help’s me more to finish my report fastly with regards the effects of the weak dollar to the philippine economy… tenchu…
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