MANILA, Philippines – The declining oil prices and the strengthening dollar are not expected to put a dent on the steady flows of remittances to the Philippines, a Bangko Sentral ng Pilipinas official said.
BSP Deputy Governor Diwa C. Guinigundo told reporters that overseas Filipino workers usually have a fixed amount they send home, thus, they tend to remit more whenever the dollar is stronger or less when the greenback is weaker.
“They need to maintain the peso value of their remittances. Their expenses are in peso. I think that’s the psyche of most OFWs (and) we see this in the data,” Guinigundo said.
Latest central bank data showed cash remittances increased two percent to $2.122 billion in November from $2.08 billion in the same month in 2013.
This brought the 11-month figure to $21.911 billion, up 5.7 percent from the $20.796 billion a year ago.
On the declining oil prices, Guinigundo said that oil-producing firms in the Middle East are not seen cutting jobs so this should not have a significant effect on remittances.
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“They didn’t bring down production, (and besides) it’s harder to lay off people than rehire them. These companies can operate at a loss. They would rather absorb the cost of transition rather than absorb the cost of rehiring,” Guinigundo said.
The Organization of Petroleum Exporting Countries in November has kept its output target unchanged, further sinking oil prices in international markets.
Asian benchmark Dubai crude has averaged $62.56 per barrel in December last year, below the $107.81-per-barrel average in June 2014 and the $103.99-per-barrel average back in January 2014.
Remittances play a big role in supporting domestic consumption, the largest driver of the Philippine economy.
In 2013, cash remittances amounted to $22.968 billion and accounted for more than eight percent of the country’s gross domestic product.