Strong Peso Forecast is Not Good News For Everyone!
Posted on October 24, 2007
Filed Under Sending Money, Living in the Philippines, Commentary |
Strong Peso forecast is not good news for everyone!
The Philippine pesos has forecast to hit the 43.5 mark by the end of this year.
For the millions of Filipinos sending money home to their families this is not good news as the cost to send that money home will increase dramatically.
The Filipino workers abroad are already raising hell about the strengthening of the peso to the dollar. Threatening to boycott what they call an “artificial surge” of the Philippine currency.
Overseas Filipino Workers are expected to send home $14.7 billion dollars for 2007 up 5% from 2006 and $12.8 billion. According to ABS-CBN.
The strengthening of the peso, be it real or artificial, coupled with the fees to remit this money home, will only mean OFW’s will have to sending more money to make up the difference.
How can this be positive for OFW’s and Filipino people overall?
I’m not an economist by a long shot but I only see life getting harder for them.
Once again, someone please tell me, how can this be positive?
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4 Responses to “Strong Peso Forecast is Not Good News For Everyone!”
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This so-called strengthening of the peso is just a way for the government to take a share of every remittance that is sent. It is more like a tax than anything. In the last 2 years we have seen the peso “strengthen” about 25% (55-56:1 to 44-45:1) yet prices in the Philippines have gone up, not down. That proves that the value of the peso is just an arbitrary number that they pull out of their ass in order to fool the people into thinking that things are improving.
The reality is that the people are not buying it. They know they now can buy less for the same money they had two years ago when it should be the opposite. Instead of gasoline being 45 pesos per liter, it ought to be 35 pesos per liter. Pork should be 95 pesos per kilo, not 125.
Chris,
Thanks for answering a question that’s been nagging me for a while..
What’s the cost of food etc….
Now I have a good Idea.
Salamat,
Don
Take a look at the Philippine peso in comparison to other stable foreign currencies.You will see that it has remained fairly constant. So we can conclude that it is NOT a strong peso that has created the huge loss towards the US dollar.
It is a weakening US dollar to blame.
Also the Philippines uses a floating exchange rate system, which means that rates are set by supply and demand. The government has little control over rates.
Prices are going up world-wide, caused by many factors.I don’t quite understand how the Philippine government can take a bite out of each remittance.
Were they doing this before the “strong peso”? What about remittances from countries that the peso has stayed constant?
To the average Filipino, the exchange rate has little impact on his day to day life. Prices of Philippine goods are not determined by the value of the dollar.
” It is more like a tax than anything. In the last 2 years we have seen the peso “strengthen” about 25% (55-56:1 to 44-45:1)”
So it seems it’s bad for the person recieving a remittance, they can buy less. Bad for the country in that regard as well,less overall purchasing power .
It’s positive effect on the national debt is huge for the country. I don’t know how much of the national debt is owed to the US but it is 25% less than it was, without a piso or dollar changing hands. It all comes at a cost but I think the people benefit in the long run.