OFW remittances to further strengthen Peso

An economist has projected the Philippine peso to remain firm against the US dollar week as seasonal remittance inflows from overseas Filipino workers (OFWs) continue to pour in during the year-end season. 

The peso earlier closed the day’s trade at 50.04, sideways from its 50.045 close a day ago. It even touched the 49-level mid-trade. 

In a report, Rizal Commercial Banking Corporation (RCBC) chief economist Michael Ricafort said the peso finished among its strongest in more than a month “as holiday-related spending could still continue until the New Year holiday.” 

“The peso remains relatively stronger recently largely due by the widely expected surge/culmination of US dollar inflows and their conversion to pesos in a typical year to prepare for the season’s spending spree by consumers/OFW families, as well as to finance Yuletide payrolls and other expenditures by businesses/exporters and other institutions that have US dollar/foreign currency revenues/income sources,” he said. 

Ricafort said the local currency’s recent performance may also be attributed to continued improvement in global market risk appetite with the US S&P 500 closing at new record highs in the light of the improved US economic data recently and some easing concerns over the Omicron variant with less risk of hospitalization based on recent studies. 

He said the peso-dollar parity is now near its levels when the pandemic started, or around 50.635 by end-2019. He traced this to the return of the country’s trade figures to pre-pandemic levels, with the trade deficit now at its widest since January 2019.

Philippine Statistics Authority (PSA) data show that the trade deficit last October rose by 96.1 percent year-on-year, higher than the previous month’s 76.3 percent and a reversal of year-ago’s -42.7 percent. (PNA)