Arroyo says strong peso not bad for OFW families

Cebu Daily News

Posted date: December 11, 2007

MANILA, Philippines — The rise of the peso also has its benefits.This was according to President Gloria Macapagal-Arroyo who assured Filipinos based in Kuwait on Sunday night that her administration was doing everything to help overseas Filipinos cope with this situation.

Speaking to the Filipino community in Kuwait, where she made an overnight trip to personally appeal for the life of death row convict and Filipino maid Marilou Ranario, the President said her administration was well aware that many overseas Filipino workers were bothered by the continued appreciation of the peso, as it had led to the decline in the value of foreign currencies they were sending home.

“But on one hand, the rise of the peso is an indication of a robust national economy and this also has many benefits,” she said in a speech.

The Chief Executive cited the fact that the rise of the peso resulted in only the slight increase of gasoline prices and thus, the cost of transportation did not go up.

The peso has appreciated against the dollar by about 11 percent in January to September from a year ago and has recently touched on the P41 to $1 territory.

But in her speech, President Arroyo said the government understood the impact of the peso’s appreciation to OFWs, who have been sending money to their families. President Arroyo said the government was now taking measures to bring down the cost of remittance fees.

She added that a new government program was set to be undertaken this time to help provinces where there were many OFWs with low pay.

“We’re doing a survey that will find out the provinces where many of our domestic helpers come from … From there we will send help for the families of the OFWs,” Arroyo said.

On Monday, the peso shone in lackluster Asian currency markets to close at a new seven-and-a half year high of 41.58 against the US dollar, powered by overseas Filipino remittances ahead of the Christmas holidays.

The local currency opened at 41.69 and hit a low of 41.715 on suspected Central Bank intervention in early trade, but regained its momentum to close at the intra-day high of 41.58 against the greenback. The peso is now trading at its strongest level since hitting 41.56 on May 15, 2000.

The peso is Asia’s best performing currency for 2007, having gained by about 18 percent since the start of the year.

Elsewhere in developing Asia, other currencies like the Thai baht, Indonesian rupiah and Malaysian ringgit posted modest gains while the Korean and Taiwanese dollar even fell on cautious trading ahead of the US Federal Reserve’s interest rate setting on Monday night (Manila time).

“The BSP (Bangko Sentral ng Pilipinas) is trying to temper the peso’s appreciation by buying dollars, but it’s really a strong season for OFW (overseas Filipino worker) inflows,” a currency trader said.

Another trader said the BSP’s intervention was “not noticeable” given the strong influx of foreign funds.

“It gapped down in the opening then profit-taking set in. Only towards the close that sell-offs of dollars resumed,” the trader said.

Global currency markets sold down the US dollars ahead of an expected interest rate cut by the US Federal Reserve Monday night.

Most bet on a 25 basis-point cut but turned cautious on the possibility that the US central bank may cut interest rates more aggressively.

On the other hand, lower US interest rates tend to drive funds to high-yielding Asian assets, which in turn could exert more upward pressure on Asian currencies like the peso unless local central banks match the monetary easing.

Volume at the Philippine Dealing System amounted to $466 million versus last Friday’s $306.5 million. /Inquirer