MANILA – Filipinos overseas send the most dollars home in the run up to the school enrollment and Christmas seasons, providing seasonal boosts to the peso and spurring domestic consumption that is one of the main drivers of economic growth.
Cash remittances peak during June and December, as families of expatriate workers pay for tuition and shop for holiday gifts, according to monthly data from the Bangko Sentral ng Pilipinas from 2013.
In February, cash remittances, or money coursed through banks and financial institutions, reached $2.17 billion, roughly the same as the previous month. Remittances reached $2.56 billion in December.
Remittances account for around 10 percent of gross domestic product, which has grown at one of the fastest paces in the world in recent years. The economy grew 6.9 percent last year and the World Bank forecasts the same rate of expansion this year and next.
The steady stream of dollars from the roughly 2 million Filipinos working overseas, coupled with earnings from the business process outsourcing industry, has helped the peso recover from 10-year lows against the dollar, Bangko Sentral ng Pilipinas Governor Amando Tetangco said in a television interview.
The peso opened at P49.55 on Tuesday, little changed from P49.54 on Monday. Analysts also attributed the peso’s strength to foreign fund inflows in the stock market.
“The second quarter is a strong month for remittances. There’s still room for the peso to strengthen closer to 49 to 49.25,” BDO Unibank chief market strategist Jonathan Ravelas told ABS-CBN News.
Finance Secretary Carlos Dominguez had said that he preferred a “slightly weak” peso to give the families of OFWs more spending power.
First Metro Asset Management Gus Cosio said he was “not uncomfortable” with the peso at the P50 level against the dollar.
“The sizes of wallets of OFW beneficiaries become larger with the weaker peso, more peso for their remittances,” Cosio told ANC.
President Rodrigo Duterte's spokesman said the peso's strength reflected investor confidence in his leadership.
"Under the PRRD (Duterte) administration it is a doctrine that an economy thrives when there is peace and order," Secretary Ernesto Abella said in a statement.