A STRONGER peso is an indication that the holiday season is now peaking as overseas remittances build up. This trend is putting big smiles to peso investors.
Cebuano banker Maximo Eleccion said that the peso becomes stronger in the latter part of the year as remittances from Filipinos abroad start to come in.
“The stronger peso is caused by lower inflation that resulted to higher real rate of return of Philippine peso bonds,” said Eleccion, who is Visayas area business director at BPI Family Savings, Monday, Nov. 4, 2019.
“Peso is usually stronger in the months of November and December because of overseas remittances,” he added.
Based on normal and historical trend, Eleccion said the banking sector is “expecting remittances to be higher this year versus last year.”
Despite the successive interest rate cuts by the Bangko Sentral ng Pilipinas (BSP) this year, the cooling inflation has made real yields on the country’s bonds among the highest in the region.
The country’s annual inflation rate dropped to 0.9 percent in September from 6.7 percent a year earlier, as rice prices continue to drop after the government liberalized imports.
The peso has so far strengthened 3.6 percent this year and reached P50.715 per US$1 last week, the strongest since January 2018.
Remittances
The BSP said cash remittances from overseas Filipino workers (OFWs) reached $2.6 billion in August 2019, up 4.6 percent compared to the same month last year. This brought total cash remittances for the first eight months of the year to $19.8 billion, higher by 3.9 percent during the same period in 2018.
Personal remittances reached $2.9 billion in August, up 4.2 percent, bringing personal remittances for the first eight months of 2019 to $22 billion, up 3.6 percent from last year.
The US had the highest share of overall remittances for January to August 2019 at 37 percent. Saudi Arabia came second, followed by Singapore, United Arab Emirates, the United Kingdom, Japan, Canada, Hong Kong, Germany and Kuwait. (CSL)