NUMBER OF OFWs INVESTING DROPS TO LOWEST LEVEL SINCE '08
MANILA, DECEMBER 17, 2012 (PHILSTAR) The number of overseas Filipino workers (OFWs) investing have dropped to its lowest level since 2008 as worries on lower returns kept their money idle with the banks, data from the Bangko Sentral ng Pilipinas (BSP) showed.
Only 3.1 percent of OFW households nationwide are investing a portion of their income in the fourth quarter, down from 4.9 percent in the previous quarter, results of the latest Consumer Expectations Survey showed.
The latest figure is the lowest since the second quarter of 2008 when those into investments only numbered to three percent. A total of 478 OFW households participated in the survey conducted from Oct. 1 to 12.
“They are probably discouraged by the low interest rate regime. What they are doing probably is to just keep their money as savings,” BSP Deputy Governor Diwa Guinigundo told reporters last Friday.
The same survey showed those families into the habit of saving improved to 39.5 percent in the latest quarter from 36.8 percent in the last three months.
Business ( Article MRec ), pagematch: 1, sectionmatch: 1 The low interest environment, partly a reflection of policy rate cuts earlier in the year, has resulted in lower yields in government bonds and bank savings rate. The two are among those considered as safe havens for investments compared with more volatile equity market which offers higher returns.
BSP data showed average savings deposit rate has gone down to 1.25 percent as of September from 1.77 percent last year. Yields of government securities have also declined, with the rate of the benchmark 91-day Treasury bill reaching as low as 0.18 percent last auction. Ten-year bond rate—another benchmark—dropped to a record-low of four percent.
BSP’s key rates stand at their record lows of 3.5 percent for overnight borrowing and 5.5 percent for overnight lending after being slashed four times this year. They were kept on hold last Thursday, but Guinigundo said market interest rates are expected to dip further.
“Only about 62 percent (of previous cuts) have been passed through,” he explained.
But Guinigundo said the drop on investing OFWs may not entirely mean bad news, as this could also indicate more of them “may have gone to entrepreneur activities.”
Aside from savings and investments, BSP has also encouraged OFWs to establish their own businesses as another source of cash flow during its financial literacy campaign that has been going on since 2007.
Sought for comment, Jonathan Ravelas, chief market strategist at BDO Unibank Inc., attributed the lower turnout to the appreciating peso, one of Asia’s best performing currencies vis-à-vis the US dollar.
“Stronger peso means less money to spend,” he said, and as such OFW families use more of their dollar earnings to retain the usual value of their spending, leaving less for savings and investments.
Chief News Editor: Sol Jose Vanzi
© Copyright, 2012 by PHILIPPINE HEADLINE NEWS ONLINE
All rights reserved
PHILIPPINE HEADLINE NEWS ONLINE [PHNO] WEBSITE