Remit smarter: Score savings with expected Philippine peso weakness by August end!
Maximise your remittances to Philippines by taking advantage of this home currency trend
Dubai: Good news! Sending money from the UAE to Philippines just got more financially savvy! Here's the deal!
Among popular South Asian currencies, the Philippine peso is seen weakening the most against the UAE dirham in the coming weeks, say foreign currency exchange (forex) analysts.
This translates to more money for you: When sending UAE dirhams home in Philippines, you'll get more pesos for your loved ones. So if you’re ready to leverage these remittance-friendly rates, here's what to do..
Here is an analysis of how the Philippine peso has been performing and expected to perform in the coming weeks and month, to help understand whether remitting money now is profitable or cost-effective, or should you wait it out for a few weeks for a better rate to come along.
Philippine peso value to weaken more by August-end, remit then
The peso was at 15.60 to the UAE dirham and at 57.28 against the US dollar at the start of August, and these rates are seen dropping over the next four weeks. Year to date, the peso has depreciated by 5.6 per cent from its 2023-end close of 55.37 to $1.
By August-end and the start of September, the exchange rate is seen hitting low value points within 15.29 and 15.31, according to the latest research, making it the most cost-effective to remit when it does.
“While a weaker peso would mean a better exchange rate for overseas Filipino workers (OFWs) who send money home in US dollars, or a currency pegged to the greenback like the UAE dirham, a weaker peso would also mean that you will get comparatively more pesos back home,” said Amit Trivedi, a forex analyst in Dubai.
As the value of the Philippine peso is expected to further weaken in value against the UAE dirham in the last week of August and first week of September, such rates make it cost-effective to delay your remittance plans until it does.
These include factors such as imports and exports, inflation, employment, interest rates, growth rate, trade deficit, performance of equity markets, foreign exchange reserves, and macroeconomic policies, inflow of investments, banking capital, commodity prices and geopolitical conditions.
A decline against the dirham reflects the decline of the currencies against the rising US dollar on which the UAE currency is pegged, and if the US dollar weakens, the trends will reverse. Simply put, any weakness or strength in the value of your home currency against the US dollar will be automatically reflected in its exchange rate with the UAE dirham as it is pegged to the dollar.
However, it is also interesting to note that an official from the central bank of the Philippines, the Bangko Sentral ng Pilipinas (BSP), flagged recently that any depreciation of the peso against the US dollar is “only temporary”.
Upcoming decision on interest rates to hurt Philippine peso?
The Philippine peso was widely expected to weaken significantly against the US dollar and against those currencies pegged to the greenback if the BSP decides to cut borrowing costs at its next week’s meeting. But this now seems highly unlikely.
Following higher-than-expected inflation seen in July, Bloomberg reported the BSP Governor Remolona saying that it is "a little bit less likely" that BSP will lower rates at the August 15 meeting next week, citing that inflation was "slightly worse than expected".
With higher price or inflationary pressures seen in the Philippines, Shi Cheng Low, country risk analyst at global broker Fitch’s BMI Country Risk and Industry Research, too had recently agreed that an immediate rate cut was “out of the question”.
“Right now, the peso is very near the 59 to $1 level mark and this is the level that (BSP) defended in 2022, and the BSP has been actively intervening since,” he said, while adding that currency stability will be the biggest constraint for the BSP to ease policy moving forward.
Bottom line?
“Remittance rates will seem largely favourable to Filipino expat remitters in the coming days as the value of their currency back home is currently experiencing renewed weaknesses,” added Trivedi. “Moreover, with the US dollar expected to rise further in the weeks to come, more remittance opportunities will arise for other South Asian currencies as well.”