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By Chino S. Leyco, Reporter
MONEY sent home by overseas Filipino workers (OFW)
hit a fresh record last January, the Bangko Sentral ng Pilipinas (BSP)
said Friday.
In a statement, the BSP said remittances coursed
through banks increased 15 percent to $1.264 billion from $1.099
billion in the same period last year. Last January’s growth was
likewise stronger than the rise seen in the two previous months.
For this year, the BSP expects remittances to
reach P15.7 billion. Money sent home by OFWs accounted for about 10
percent of the nominal gross domestic product, the broadest measure
of economic activity, last year.
The central bank said monthly remittances have
been surpassing the billion-dollar level since May 2006.
To date, the bulk of remittance flows came from
the US., Saudi Arabia, UK, Italy, the United Arab Emirates, Canada,
Japan, Singapore, and Hong Kong.
“The robust foreign exchange inflows at the
start of the year could be traced in part to the acceleration in the
deployment of Filipino workers,” the BSP said.
Preliminary data from the Philippine Overseas
Employment Administration showed that deployment of workers in
January grew 12.4 percent year-on-year.
“Continued preference for and confidence in
the professional competence and skills of Filipino manpower support
the view that a high level of remittances could be sustained in the
months ahead,” the central bank said.
The strong dollar inflows arising from robust
remittances had helped lift the peso by 19 percent last year, making
it Asia’s best performing currency. This also swelled the
country’s dollar reserves, and allowed the government to prepay
part of its foreign currency debt.
At the Philippine Dealing System, the local
currency on Friday however slipped to 41.54 to the dollar from
Thursday’s 41.45 finish. Trading volume reached $640 million,
climbing from $508.62 million the previous day. A trader blamed the
weakness to continued volatility brought about by falling equity
markets and tightening credit.
“High crude oil prices also contributed to the
weakening peso,” he said, adding a weak currency will continue
until next week due to preparations for the long Lenten holiday.
Before its recent fall, the peso’s rapid
appreciation had helped temper consumer price increases, which have
risen to a 16-month high last February on account of skyrocketing
oil and food prices in the world market.
The up tick in inflation led the BSP to hold
onto its overnight rates last Thursday. In a decision, its
policy-making Monetary Board kept the overnight borrowing and
lending rates at five and seven percent, respectively, putting a
halt to a rate-cutting exercise triggered by the US Federal
Reserve’s efforts to arrest a credit crunch by reducing its
counterpart Federal funds rate.
Even as it kept its overnight rates steady, the
BSP however refined its special deposit account (SDA) by closing a
number of short-term windows and cutting the rates on the remaining
ones.
Market players welcome BSP move
Market players said the move would benefit the
national government, as demand for Treasury bills and bonds is
expected to rise, thus keeping benchmark rates at current low
levels.
In a report, Development Bank of Singapore (DBS)
said the BSP’s move gives the Bureau of Treasury better chances of
securing short-term borrowings on Monday at cheaper rates.
“The move makes the [SD|A] less attractive for
banks to hold excess funds and will rekindle demand for the
government’s T-bills,” DBS said.
“We, however, don’t expect a sustained
rally, given that there is no scope for cuts in the key policy
rates,” it added.
The treasury bureau is set to offer P6.5 billion
worth of short-term IOUs on Monday.
Marcelo Ayes, Rizal Commercial Bank Corp.
Vice-President, said the reduction of the SDA rates is a “mapping
tool” to align rates across the board.
DBS said a policy rate hike in the next couple
of months is unlikely as the key risks to the inflation outlook for
the remainder of the year are linked to imported oil and non-oil
commodities.
The BSP maintains that the emerging inflation
outlook for next year is consistent with its forecast of 3.5
percent, plus or minus a percentage point.
“This is optimistic in our view,” DBS
however said.
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