Hope for ailing peso rests on OFW remittances

An official of the National Economic and Development Authority said that remittances sent by overseas Filipino workers this November to December may revive the weakening peso, which has already hit its lowest value against the United States dollar in past days.

On Thursday, the Philippine peso closed at P58.49 vs the US dollar which analysts attributed to the US Federal Reserve's big-time interest rate hike.

"We are hoping that that is very temporary. In the case of the Philippines, we are hoping to see some stabilization toward November, and December. Historically this is when we receive many remittances, pamasko na padala. This will also prop up the peso," said NEDA undersecretary Rosemarie Edillon during a public briefing.

It has been a tradition for OFWs to send additional money to their loved ones in the country during the Christmas Season, which Edillon hopes would revive the weakening peso.

In July, cash remittances from OFWs surged highest in seven months, as the Bangko Sentral ng Pilipinas data showed that remittances sent through banks rose by 2.3 percent to $2.92 billion in July, from $2.85 billion a year earlier.

Some analysts said that the peso may hit P60 by yearend.

On Wednesday, Metropolitan Bank and Trust Co. (Metrobank) treasurer and head of the Financial Markets Sector, Fernand Antonio Tansingco, said further sliding of the peso can still be circumvented "if we can get back the appropriate interest rate differentials."

Keeping the faith

Edillon, on the other hand, maintained that the government is not yet rewriting its July peso-dollar exchange rate assumption, which is currently in the range of P51 to P53 for 2022 and P52 to 55 for 2023.

Even though a higher dollar value is good for families of overseas Filipino workers, Edillon said they are still hoping that these families will keep their purchases in the country.

Further, Edillon said local manufacturers and exporters will also be able to use the weakness of the peso to clinch more market share in the international market, as a cheaper peso means cheaper Philippine products.

"We are hoping for our domestic producers and exporters to take advantage of this weakness in the Philippine peso. If we can do that, we increase those gains, and hopefully, that will generate more opportunities and more income for Filipinos," she said.