Dollar remittances of OFWs down by 2.4 percent in peso terms

THE remittances of overseas Filipinos were 2.4 percent lower in peso terms in April as the value of the peso went up and gained on the US dollar by 7.4 percent.

During the period, the value of the peso averaged P44.6266 for every dollar, up 4.5 percent from previous month’s average of only P45.7425 a dollar.

As a result, the peso value of the $1.52 billion sent home by OFWs in April amounted to only P44.6266 billion which was dramatically lower than peso value of P45.6266 billion the previous March.

This development was not lost on analysts at the First Metro Investment Corp., the investment banking arm of the Metropolitan Bank and Trust Co. which noted in its latest paper on the Philippine economy that the strength of the peso threatens the positive outlook on this year’s remittances.

According to FMIC analysts, while the remittances in April totaling $1.5 billion was 5.4 percent higher than the year earlier, this was “a tad lower compared to the previous month’s 5.6-percent year-on-year growth.”

“The continuing euro-zone debt crisis has negatively impacted this gain, which was the slowest since August of last year. Fortunately, the pace is still within our projections of 5 percent to 8 percent expansion for the full year,” FMIC said.

“The not-so-good news is that in peso terms, the remittances fell by 2.4 percent, the second consecutive month in the red. This was the result of the strong peso that was observed in April. The 7.4-percent appreciation of the peso mitigated the consumption and investment spending effects of these remittances,” it also said.

FMIC’s comments came in the wake of the acknowledgement by Deputy BSP Gov. Diwa C. Guinigundo that the remittances may have peaked already and should not increase in dramatic fashion from this point onward.

FMIC’s and Guinigundo’s comments are significant in that the remittances help fuel the economic activities of Filipino consumers whose aggregate contribution to the local output or gross domestic product equals 70 percent of GDP.

“We expect the dollar remittances to pursue a higher path this second quarter, but would still follow our full-year projections.

“The May-June months are high months for remittances as the new school year starts. This would aid in the influx of remittances as remitters would have an increased need for sending money to their families in the country. But the strong peso remains a stumbling block for these remittances to exert a greater influence on GDP growth, since a 5.9-percent appreciation for May was already recorded,” FMIC said. –Jun Vallecera / Reporter, Businessmirror