The so-called “appreciation” of the value of the peso with respect to the dollar (from 55:1 to about 45:1) has caused problems for families of many Overseas Filipinos. This is obvious – if the salary of the Overseas Filipino is denominated in US dollars, or in a currency pegged to the US dollar (e.g. that of Saudi Arabia), then an appreciation of the peso to the dollar will mean that the peso equivalent of the money sent to relatives (assuming that the remitter sends the same amount of dollars home) will be less.
However, the cause of this problem of peso appreciation lies beyond the Philippines, and is beyond the control of the Philippine government. It is not true that OF remittances are the cause why the peso is appreciating. What is happening is that the US dollar is depreciating in relation with most currencies in the world. Thus, the supposed “strength” of the Philippine peso is a myth; it is the dollar that is weak, and many Filipinos are now in effect victimized by the bad economic policies of America.
The Philippine government is trying to get credit for something it had nothing to do with. This is probably an ill-advised effort on their part to claim successes in its economic policies. At the same time, Overseas Filipinos (OFs) would be wrong to claim that the peso is strong because of remittances. In fact, we could even claim the opposite – that the remittances have increased significantly because of the dollar’s drop in value. Why so? Since the remittances are counted in dollars, the amount remitted by OFs from the US and countries whose currencies are pegged to the dollar remain constant; while the dollar amount remitted from OFs in other countries would increase (since if they remitted in constant amounts for their local currency, they will fetch more dollars).
In other words, there is nothing either the Philippine government or the OFs could do about the peso:dollar exchange rate. It would be wrong, and futile, to ask for Philippine government intervention to make the peso “weaker” – they just couldn’t do it, even if they wanted to do so. At the same time, it would be downright pathetic for OFs to try to weaken the peso by limiting remittances – the only effect this action will have will be to make things even worse for their relatives.
The economic forces at work are much to massive for us to tackle. We can only hope that countries like Saudi Arabia decide to end their currency’s peg with the dollar, so that OFs there would be relieved from problems with the dollar’s weakness.
see also Peso-Dollar Rate
