MANILA, Philippines – Because of the combined effects of the strong peso and the weakening US dollar, overseas Filipinos (OFs) lost over P24 billion in income last year compared to 2006 figures.
Data from the Bangko Sentral ng Pilipinas (BSP) showed that the losses would have gone up to P26 billion had not other currencies appreciated against the US dollar as well.
OFs refer not only to contract workers but also to migrants and other permanent residents.
A study being conducted by the BSP’s Department of Economic Statistics indicated the value of losses suffered by OFs based on comparative remittances between January and September in 2006 and 2007.
Determining how many OFs were affected and had to absorb the losses due to currency exchange fluctuations was more complicated, BSP officials said.
BSP Governor Amando Tetangco Jr. said that over half of OFs were affected by the weakness of the dollar – more than those originally estimated.
Tetangco said that based on preliminary estimates, about 12 percent of OFs were paid in US dollars but the actual impact of the weakening American currency affected a lot more Filipinos abroad.
Tetangco said many of the OFs were paid in third currencies whose exchange rates are pegged against the US dollar, which means that their salaries depreciate as the US dollar loses strength.
Tetangco said the BSP has been conducting a more systematic assessment of exactly how many Filipinos abroad were receiving salaries in which currencies and which of these currencies were pegged against the dollar or any other major currency.
“We want to get a clearer view of the extent of the effects of currency exchange fluctuations,” Tetangco said. “Off hand, I’d say that a little over 50 percent of overseas Filipinos are paid in US dollars and other currencies pegged against the US dollar.”
Rough estimates from the BSP-DES indicated that based on the latest available figures, the stock of overseas Filipino workers (OFWs), including workers in the US, accounted for 6.09 percent of the total figure.
Out of the total OFWs, sea-based workers who were normally paid in US dollars accounted for another 5.87 percent.
“These two combined represent 11.96 percent of the total stock of OFWs as of the end of 2006,” said Ma. Rosabel Guerrero of the BSP-DES.
“But the figures cited are those of OFWs, not the entire stock of overseas Filipinos that would include migrants and permanent residents abroad,” Guerrero pointed out. “We also have to note that there are other countries whose currencies are pegged to the US dollar, like Hong Kong, Saudi Arabia and other Gulf states,” she said.
“We have to qualify these when we talk about the impact of currency movements on OFW remittances.”
For 2008, Tetangco said the BSP total remittances from overseas Filipinos would reach $16.2 billion, with labor deployment increasing despite the slowdown in the US economy.
Tetangco said gross OF inflows would expand by 8 percent next year, including remittances that go through informal and non-bank channels.
Remittances that go through banks, on the other hand, were projected to grow at a faster rate of 10 percent to reach $15.7 billion compared to only $14 billion this year.
The peso was expected to stay firm this year and even exporters were already bracing themselves against the possibility of the dollar going below P40 this year, the BSP said.