Peso harnesses strength from strong OFW inflows

The peso strengthened against the US dollar on Friday as financial markets waited for details on Trump tariffs amid the country’s low inflation.

The local currency closed at P56.821 per $1 on Friday from P57.095 on Thursday, slipping from a peak of P59.104 in December last year and P58.79 in January.

Security Bank chief economist Angelo Taningco said the peso appreciation will continue to be driven by strong inflows of remittances from overseas Filipino workers (OFWs).

According to the Bangko Sentral ng Pilipinas, OFW remittances in January grew by 2.9 percent to $3.24 billion from $3.15 billion recorded in the same month of 2023.

Remittances seen as equalizer

Rizal Commercial Banking Corp. chief economist Michael Ricafort said OFWs might send more money back home as Trump’s tariffs threaten a slower decline in interest rates based on central banks’ policy rates.

“The remittances could help their families cope up with still relatively higher interest rate payments since 2022 for any amortization for housing loans, auto loans, personal loans, business loans, and other consumer loans,” Ricafort said.

Morgan Stanley, a global financial firm, said the US Federal Reserve might hold off cutting its rate this year due to possible higher US inflation.

Ricafort said this will stem from retaliatory tariffs as a response to Trump’s over 10 percent tariffs on imports from several countries.