Dubai: Filipinos in the UAE are expected to make a beeline at exchange houses over the next few days, as their home currency languishes in multi-year lows.
The Philippines’ peso on Friday fell to 52.63 to a US dollar, the lowest in 12 years, consequently pushing up the remittance power of the Asian country’s migrant workers based in the UAE.
The currency has been losing strength partly due to high interest rates in the United States, and in one year alone, expats have been able to send more out of their dollar-pegged earnings.
Filipinos are among the biggest remitters of funds from the UAE, sending a total of Dh3.1 billion in the last quarter of 2017 alone.
As of Tuesday morning, the peso stood at 14.32 to a dirham, which means that for every Dh1,000, Filipinos can send home about 14,300 pesos. That’s a jump in remittance value of 1,000 pesos compared to June last year, when the same amount could fetch only a little over 13,000 pesos.
Promoth Manghat, CEO of UAE Exchange Group, said he hasn’t seen the Asian currency slide this far since 2008, and with the salaries at most companies expected to be released before the end of the week, he added that they are expecting remittance transactions to surge over the next few days.
“We expect the remittance to spike in the next few days,” Manghat told Gulf News.
“While [the depreciation] may perturb the local economy briefly, the remittance inflow by the overseas Filipino workers, who capitalise on the competitive exchange rate and send more money in to their home country, encourages economic stability,” he added.
However, Rajiv Raipancholia, treasurer of the Foreign Exchange and Remittance Group (FERG) said, there might not be further declines soon, as the Philippines’ Central Bank has recently stepped in to stem the depreciation.
“When the peso touched [a new low recently], the Philippines’ Central Bank had to intervene to bring the peso back to 51.89, which happened within a week,” he said.
“Since the central bank is intervening in the market, the peso is not expected to break 53 against the US dollar for the time being.”
Moody’s warned on Friday that the peso depreciation poses risks, as it can increase the cost of foreign borrowings and lead to more capital outflows.
"Currency pressure will exacerbate already weak debt-affordability metrics. If associated with capital outflows, tighter financing conditions will have wider repercussions for the balance of payments," said Anushka Shah, Moody's vice president and senior analyst.