Cash remittances hit $2.8B in Sept. amid strong dollar

By Keisha B. Ta-asan, Reporter

CASH REMITTANCES hit a two-month high in September as overseas Filipino workers (OFWs) took advantage of a strong dollar to send more money to their families.

Data released by the Bangko Sentral ng Pilipinas (BSP) on Tuesday showed cash remittances coursed through banks rose 3.8% to $2.84 billion in September from $2.74 billion in the same month last year. 

The amount of cash sent home by OFWs was the highest in two months or since the $2.92 billion in July. 

However, the pace of cash remittance growth slowed to 3.8% from 4.3% in August.

“The expansion in cash remittances in September 2022 was due to the growth in receipts from land-based and sea-based workers,” the BSP said in a statement on Tuesday.   

Land-based OFWs sent $2.25 billion in September, up 4.1% from $2.16 billion in the same month last year. Remittances from sea-based workers grew 2.4% to $594.79 million in September from a year ago.     

The strong dollar has prompted many OFWs to send more money to their families, who are coping with rising prices of food, utilities and transport.

“I think our migrant brothers were encouraged to send because of the higher nominal exchange of their dollars,” UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said in a Viber message.   

“We know that September was one of the months when the dollar was getting stronger and the peso succumbing to weakness,” he added.

The peso closed at P58.625 against the US dollar on Sept. 31, weakening by P2.48 or 4.23% from its Aug. 31 close of P56.145.

As of Sept. 31’s close, the peso has weakened by P7.625 or 13% versus the dollar from its P51 finish on Dec. 31, 2021.

However, soaring inflation may have reduced the spending power of OFW families.

“Whatever gains OFWs and their families/dependents may have due to more peso proceeds for their US dollars/foreign currencies may be offset/negated by higher local prices/inflation,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in an e-mail note.

Headline inflation accelerated to 6.9% in September, from 6.3% in August as prices of food and utilities continued to rise. September marked the sixth straight month that inflation breached the 2-4% target. 

For the first nine months of the year, cash remittances jumped 3.1% year on year to $23.825 billion from the $23.117 billion in the same period in 2021.     

Inflows from the United States, Saudi Arabia, Singapore, and Qatar largely contributed to the growth in cash remittances during the January to September period.   

Nearly half or 41.7% of the overall remittances came from OFWs in the United States, followed by Singapore (6.9%), Saudi Arabia (5.9%), Japan (5%), the United Kingdom (4.8%), and the United Arab Emirates (4%).

Remittances from the top 10 countries accounted for 99.9% of the nine-month total.

“The better pace of remittances may in part have been driven by good economic prospects in some of the host countries including the US, combined with remitters taking advantage of the weak peso,” Security Bank Corp. Chief Economist Robert Dan J. Roces said in a Viber message.   

Meanwhile, personal remittances, which contain inflows in kind, increased 4% year on year to $3.15 billion in September.

This brought personal remittances 3.1% higher to $26.49 billion in the first three quarters of the year from $25.7 billion recorded in the comparable year-ago period.   

“Moving forward, it seems that remittances are more stable in their trajectory compared with 2020-2021, which also means a pre-pandemic growth rate and the usual spike in holiday remittances as Filipinos will likely celebrate with looser restrictions this year,” Mr. Roces said.   

BSP data showed cash remittances climbed 5.1% to $31.418 billion in 2021 from $29.903 billion in 2020. Remittances rebounded in 2021 after a 0.8% decline in 2020, at the height of the coronavirus pandemic.

Remittances typically surge in December as OFWs send more money back home during the holidays. 

“It is not difficult to picture a more robust (fourth-quarter) consumption growth as Christmas draws near, and with that, (fourth-quarter) remittance inflow levels are expected to be stronger and higher,” Mr. Asuncion said.   

The BSP expects remittances to grow by 4% this year.