Overseas Filipino Workers and Currency Trading
The central bank of the Philippines or Bangko Sentral Ng Pilipinas is reporting that remittances from Overseas Filipino Workers (OFWs) is up 6.2% for the first five months of 2011 over the same period last year.
Reportedly the falling value of the dollar to Philippine peso has resulted in even larger amounts of American cash being sent to the Philippines. The dollars don’t just come in from the USA. Most do but other major suppliers of the American dollar to the Philippines are Canada, Saudi Arabia, Britain, Japan, Singapore, the United Arab Emirates, Italy and Germany. The more dollars coming in, the lower its value in currency trading.
The central bank is not expecting the problems with Saudi Arabia to have any impact on remittances as they believe Filipino will find work in other places. Based on what I’ve seen in the past, I am inclined to agree.
If the US defaults on its debt, then I suspect the currency that the Philippines targets will also change. I’d be surprised if Filipino authorities have not already started moving that way to a small degree. Nothing major, because most believe that the US will not default. I don’t think it will either but as the clock ticks, I’m growing less confident.
It is interesting that the lower the dollar gets the more dollars that come in. This of course increases the supply of the dollar within the Philippines and further lowers the value of the dollar. This in turn further hurts exports to the USA from the Philippines. If the dollar buys less in the Philippines, then then there will be fewer exports. Of course, the slow growth in the US economy is an even bigger issue.
China’s growth though may help to reduce the fallen exports. Japan also imports a lot from the Philippines. I know a Filipina that works at a Japanese factory that produces lens. She was worried about her job before the earthquake in Japan. I’ve had very little contact with her since that happened though.
The Philippine Overseas Employment Administration is reporting it has received almost 330,500 orders for new Filipino workers in such countries as the UAE, Kuwait, Qatar, Hong Kong and Taiwan. I hadn’t considered before that even Filipino working in countries other than the USA would still be sending American currency to the Philippines.
Taiwan and The Republic Of The Philippines also had a pretty serious spat this year too. The Philippines deported some individuals from Taiwan this year to China. The Philippines is caught in the middle, it can’t really afford to offend China and recognizing Taiwan would do just that. Taiwan threatened to send Filipino workers home over the incident.
Dollar To Philippine Peso Currency Trading Continues To Decline
The dollar to Philippine Peso rate has continued to fall, it has stayed above the P41 mark. American expats living in the Philippines can thank the Greeks for that. As most know by now, the Euro has been taking a beating in currency trading because of the danger of a default by Greece.
I see that gold is up to over $1588 which is a pretty rapid rise and a strong indication that those involved in currency trading are loosing faith in the dollar and with darn good reason.
It does appear now that the US Congress has finally come up with the correct plan, though it appears to be Obama’s plan which means to me, it will not pass. That in spending cuts now with future revenue increases. Even some Democrats are reluctant to support the bill while some Republicans say they will only vote for an increase in the debt ceiling if it is tied to a balanced budget amendment. Republican leaders have said that stands zero chance of getting out of the senate and Obama has said he would veto it if it did. It is a stupid, short sighted idea that sounds great but would cripple the USA.
In case, for now, the Filipino overseas worker continues to pour US dollars into the Philippines. Remittance from OFWs account for about 10% of the economy in the Philippines and will remain vital for sometime to come. However, it seems that currency trading is moving away from the US dollar.
Filed under: Dollar To Philippine Peso
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