PESO HITS 30-MONTH HIGH / OFW REMITTANCES REACH $8.8 BILLION
MANILA, December 16, 2005 (STAR) By Des Ferriols - After a few days of lackluster trade, the peso surged anew yesterday, rising to its strongest level in 30 months as the Bangko Sentral ng Pilipinas (BSP) said Filipinos working overseas sent home 17 percent more money in October than a year earlier.
The peso opened yesterday’s trade at 53.35 before hitting 53.16 to $1 in early trading, its strongest in two-and-a-half years, as the dollar itself weakened due to a deteriorating US trade balance.
At the close of trading, the peso gained 20 centavos to settle at 53.25 from Wednesday’s close of 53.45 to the dollar. Yesterday’s close was also the highest since June 20, 2003 when the local currency last touched the 53.130-to-the-dollar level.
BSP Governor Amando M. Tetangco said that the peso’s appreciation was also remarkable in that its rise had been steady but sure, prompting market analysts to tag the peso as this year’s best performing currency in the region.
Tetangco told reporters that the peso had one of the lowest rate of volatility in the region at 1.4 percent. This, he said, compared well with the volatility of the Singaporean dollar at 1.38 percent and close to the volatility rate of the Korean won of 1.51 percent.
In contrast, the Japanese yen was the most volatile currency in the region at 4.45 percent while the Thai baht followed with a 2.79 percent volatility rate and the Indonesian rupiah at 3.58 percent.
"The peso continues to gain ground because of favorable factors such as the sustained inflows from portfolio investments and OFWs," Tetangco said. "On the other side of that is that this time of year, corporate demand for dollar is relatively moderate."
Remittances, which account for a 10th of the country’s economy, were $867 million in October, bringing the total for the first 10 months of the year to $8.8 billion.
Going forward, Tetangco said the peso is likely to remain strong for the remainder of the year, bolstered by OFW remittances. "Remittances might actually continue to be strong until the first quarter of the year," he said. "It’s conceivable that the peso would be able to sustain its momentum."
The BSP expects remittances to hit $10.3 billion this year, up by about 21 percent from $8.5 billion in 2004.
However, actual numbers so far indicate that OFW remittances would go up by as much as 28 percent and hit $12 billion for the whole year.
The strengthening of the peso would have a downside on exporters whose dollar earnings would be worth less but Tetangco said the appreciation has been gradual enough to give them time to adjust.
"The important thing to monitor is the movement of the peso takes place in an orderly fashion and volatility is controlled," Tetangco said. "Since the volatility has been minimal and we have not seen sharp movements, this gives the affected sectors time to move with the flow."
OFW remittances reach $8.8B By Des Ferriols The Philippine Star 12/16/2005
Remittances from overseas Filipino workers (OFWs) continued to surge in October, pushing total inflows up by 27 percent to $8.8 billion in the first 10 months of the year, the Bangko Sentral ng Pilipinas (BSP) reported yesterday.
OFW inflows sustained the double-digit growth in October, expanding by 17 percent to reach $867 million for that month alone.
For the whole of 2004, OFW remittances amounted to $6.9 billion.
According to BSP Governor Amando M. Tetangco Jr., a combination of factors supported the level of remittances during the 10-month period.
"Global labor demand has been on the rise with the Filipino workers continuing to be consistent providers of quality human resource," Tetangco said.
With few viable options in the domestic labor market, the country deployed a total of 809,140 workers in the first 10 months of the year, up from only 794,806 in the same period last year.
According to the Philippine Overseas Employment Agency (POEA), land-based workers numbered 602,016 or three-fourths of the total deployed workers, while sea-based workers, 207,124 or the balance.
Over the medium term, Tetangco said the demand for higher-paid Filipino workers is expected to rise further in anticipation of the economic upturn in host countries.
The demand, according to POEA records, were for employment in construction, oil and gas exploration, tourism-related, health-related, information and communications technology sectors.
By country of origin, a significant portion of remittances continue to come from the U.S.A., Saudi Arabia, Italy, Japan, Hong Kong, U.K., United Arab Emirates and Singapore, Tetangco said.
From the sheer force of OFW inflows alone, the BSP said the country’s dollar surplus is expected to reach $2 billion this year mostly from remittances by Filipinos working abroad.
The BSP said remittances from overseas Filipino workers (OFWs) would grow even stronger than expected, possibly reaching close to $11 billion for the whole year.
BSP Deputy Governor Diwa Guinigundo earlier said, the country’s balance of payments could generate a surplus of up to $2 billion, much higher than the BSP’s original surplus projection of $853 million.
The BOP represents the sum total of the country’s transactions with the rest of the world, including debt repayments, borrowings, investments and remittances.
A BOP surplus would put the BSP in a better position to smoothen the volatility of the peso-dollar exchange rate while a deficit would give the central bank less flexibility.
Chief News Editor: Sol Jose Vanzi
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