Tuesday, September 11, 2012

Peso should be at at least 50 per dollar

When I was in Saudi Arabia way back in 2005, two major nationalities would always be falling in line in banks to send remittances to their respective countries: Filipinos and Indians. The exchange rates for both countries were similar; look at the historical figures below, both from 2005 to date:

This massive difference in not due to GDP growth rates as shown below, again from 2005 to date:

With the Philippines very anemic GDP, it has strengthen its currency value against major currencies particularly the US dollars - I DO NOT KNOW WHY. Similarly, strong exports should also strengthen a countrys' currency - but in comparison with India; Philippines growth in exports is dismal!! Something is very wrong in this picture!

How much money is lost from OFWs?

If we assume the value of Peso to be at par with Indian Rupee, i.e. the peso should be around 56 - then each dollar sent home is losing 14 pesos at current exchange rate of 42 pesos to the dollar - this means than the total remittances of 25 billion dollars multiplied by 14 = 350 billion pesos - is the total amount lost annually from the pockets of OFWs or around 3 Trillion pesos since 2005!!

The Indian overseas workers are getting a fare value of the money they send to India - but the Filipino OFWs sending money to the Philippines are short changed!

This is very sad.


The Philippine government should take a look at this. I wonder who is gaining hugely from this arrangement of "robbery" from OFWs.