OFW remittances up

[spiff]

van wilder... i think you forgot to consider something.

total foreign selling!

[oldblue]

obviously OFW remittances ang triggering factor. and sana naman as reward eh bumaba na ang presyo ng bilihin para naman magkarun ng saysay ang paghihirap nila.

[chua_riwap]

obviously OFW remittances ang triggering factor. and sana naman as reward eh bumaba na ang presyo ng bilihin para naman magkarun ng saysay ang paghihirap nila.

Naku......sana mag-dilang anghel ka Bro.

[Isuzoom]

Increase number of OFW = Increase of dollar in flow..sila ang hero.

[mazdamazda]

not a BIg factor? so it's just a small factor then? so if you take away even just the US$917M sent by OFWs in january (total for 2005 was US$10.7B) it does not make the big difference? so let's assume we did not send that, what do you think would have happened? still same, still strong peso? it's simple math, export receipts - (import receipts + debt service) = foreign currency deficit!

as van wilder said... no one is saying that it is a big or small factor... but it is a factor nonetheless.

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to note, total exports for jan 2006 is $3.2B

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another thing to note... the sharp increase in the price of oil products also had a thing to do with our widening trade deficit and lower peso value.

[van_wilder]

spiff: ay oo nga ano... hahaha... pero still... the thing is they still use the peso...

wag na kaya natin pinagaawayan kung sino ang may pinakamalaki ang nacontribute... the end is always more significant than the means...

[explorer]

not a BIg factor? so it's just a small factor then? so if you take away even just the US$917M sent by OFWs in january (total for 2005 was US$10.7B) it does not make the big difference? so let's assume we did not send that, what do you think would have happened? still same, still strong peso? it's simple math, export receipts - (import receipts + debt service) = foreign currency deficit!

and to think that last year was the record year for the OFWs' remitances. central bank's reserve is also at its highest ever ($20B?) because of OFW's record-breaking remitances almost month every month.

[explorer]

as van wilder said... no one is saying that it is a big or small factor... but it is a factor nonetheless.

---

to note, total exports for jan 2006 is $3.2B

---

another thing to note... the sharp increase in the price of oil products also had a thing to do with our widening trade deficit and lower peso value.

as the peso value goes up against the dollar....the export capability of the country becomes weaker. if the peso continue to appraciate....it will decrease the export considerably because the value of our export product will become less competitive in terms of price.

[mazdamazda]

as the peso value goes up against the dollar....the export capability of the country becomes weaker. if the peso continue to appraciate....it will decrease the export considerably because the value of our export product will become less competitive in terms of price.

well, that is only one side of the coin.

a stronger peso would also mean that LOCAL companies will have the capacity to expand faster since it would mean lesser cost for them is peso-value.

the peso is also greatly undervalued by around 10% or so (because of dollar speculation and political turmoils). expect it to settle around 48:1 which should be the best compromise for all parties concerned.

[explorer]

ANALYSIS: Philippines has peso problem: Now it's too strong
Posted: 11:55 AM | Mar. 16, 2006
Rosemarie Francisco

THE PESO has surged more than 8 percent since October, prompting President Gloria Macapagal-Arroyo to fete it as a symbol of improving prospects.

But not everyone is rejoicing.

"We are not only losing, we are dying," Roberto Amores, president of the country's largest food exporters association and the mango exporters group, told Reuters.

Exporters account for about 40 percent of the country's output and they are finding it increasingly difficult to make money due to the peso gains.

On top of that, the country has 8.5 million workers overseas sending home money worth about 10 percent of gross domestic product. For them, the peso's strength means their earnings pack less punch at home.

The peso, Asia's best-performing currency last year, touched a 3-1/2-year high of 50.88 per US dollar last week. When the recent uptrend started nearly six months ago, it was at 56.

There are benefits from the currency surge -- it cuts the country's debt costs and it helps curb inflation.

But some economists -- and some in the government -- say the impact on exporters and remittances could have a knock-on effect on consumer spending, employment and growth.

"If exports cannot perform because they are losing money, then economic growth will be at risk," said Romulo Neri, socio-economic planning secretary.

The government expects the economy to grow by at least 5.7 percent this year after a 5.1-percent expansion in 2005, still below the 7- to 8-percent annual growth needed to significantly improve living standards in the poor southeast Asian country.

Fewer mango sales Exporters say the rise is a big blow.

"The projection we have of 10-percent exports growth probably is no longer correct. If this persists, then exports may turn negative this year," said Sergio Ortiz-Luiz, president of the umbrella group Philippine Exporters Confederation Inc..

Among exporters, the peso's rise is mostly affecting the agriculture-based sector -- accounting for a fifth of the Philippines' total shipments -- as they benefit only slightly from the lower cost of imported raw materials.

After entering into six-month contracts at around 55 pesos per dollar in late 2005, many food exporters have stopped taking forward contracts of six months or more due to peso uncertainty.

As a result, mango customers, for instance, have turned to Mexico and Thailand, Amores said. He said the peso's rise had more than halved food exporters' profit margins.

Neri has recommended the central bank halt the peso's climb if it firms past 50 per dollar. The central bank has rejected the proposal, saying it only intervenes to blunt volatility.

"If exporters are saying they are losing competitiveness, it is not exactly correct," central bank Deputy Governor Diwa Guinigundo told Reuters. "Some of the regional currencies are stronger than the peso."

Since the start of the fourth quarter, only the Indonesian rupiah has gained more, rising nearly 11 percent.

Even so, analysts argue that the strong currency has simply magnified inherent problems in the export sector, particularly a lack of investment in capacity to meet demand and keep up with competition from China.

They note that Philippine exporters did not gain ground against regional competitors when the peso was still at around 54 per dollar. Philippine exports grew just 3.9 percent in 2005, below the central bank's 6-percent growth estimate and trailing the double-digit growth posted by most of regional peers.

Importing cash Filipinos abroad sent home an estimated 13 billion dollars in 2005, a record amount. Those funds, along with strong demand for pesos from foreign investors, have driven the currency higher despite a coup plot against Arroyo and a week of emergency rule.

For the millions of families who rely on handouts from relatives working abroad to feed, clothe and house themselves, the loss of about 5 pesos in the dollar's value means they would have about 60 billion pesos less to spend annually.

Nonetheless, there are those who say the benefits outweigh the costs.

"On a net basis, it is still quite positive," said Sailesh Jha, senior regional economist at Credit Suisse.

The cost of repaying 76 billion dollars of debt is reduced, leaving more money for improving the country's creaking infrastructure and health service.

The peso's gains have also helped dampen inflation pressures, allowing the central bank to go slow on interest rate hikes despite 14 consecutive quarter-basis-point rises in U.S. interest rates since June 2004.