Peso to 'struggle' should remittances from Middle East stay in the red
MANILA, Philippines — The Philippine peso may “struggle” should money sent home by Filipinos in the Middle East continue to drop, a bank economist said.
As Christmas approaches, cash remittances from Filipinos abroad grew 8.7 percent year-on-year to $2.5 billion in October, data released by the Bangko Sentral ng Pilipinas on Monday show.
But in a commentary, Dutch financial giant ING Groep NV said contraction in remittances from the Middle East — which declined for eleven consecutive months and posted a year-to-date drop of 15.9 percent — could pressure the peso.
“Should cash sent home from this region remain in the red, overall overseas Filipino remittance flows are expected to remain subdued, causing the Philippine peso to struggle given its dependence on these flows for support,” ING Bank senior economist Nicholas Mapa said.
Money sent home by Filipinos working abroad is one of the Philippines’ main sources of dollars, helping the economy stay afloat and providing support to the local currency.
The Middle East, where there is a large concentration of overseas Filipino workers, is a major source of remittances.
The peso was trading at the P54-per dollar level from the start of October until the middle of that month before it tapered to P53.535 at the end of the month. — Ian Nicolas Cigaral with a report from BusinessWorld
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