Personal remittances to the Philippines in November showed signs of a strengthening US dollar in an easing in year-on-year increases to their slowest rate in more than five years.
Such remittances reached $2.35 billion that month, down from a $2.46 billion recorded in October, data from the Bangko Sentral ng Pilipinas (BSP) showed on Wednesday.
On an annual basis, personal remittances in November 2014 rose 1.8 percent from $2.31 billion posted in November 2013. The November 2014 annual expansion marks the slowest growth rate since April 2009 when the inflows grew only 1.3 percent.
Personal remittances consist of net compensation for land-based overseas workers
with short-term (one year or less) contracts and all sea-based workers; personal transfers in cash or in kind between overseas Filipinos or longer-term overseas workers and their families in the Philippines; and capital transfers between households, such as funds for home construction.
The central bank traced the slower year-on-year rise in personal remittances to the weakening peso versus the dollar.
“In the past, when the dollar appreciated against the peso, the tendency was for overseas workers to adjust their remittances so that the peso value of their remittances would more or less be the same,” said BSP Deputy Governor Diwa Guinigundo.
“So if the peso depreciated against the dollar, then they could afford to send smaller amounts of dollar remittances and the peso equivalent would be broadly the same,” he added.
Sharing the same view, an analyst also attributed the exchange rate dynamics to the slower inflow of personal remittances in November.
“I think it had more to do with the exchange rate dynamics than anything. Overseas Filipinos remittances are sent home to fund peso consumption and with the US dollar strengthening, these Filipinos did not need to send as much US dollar to fund peso consumption,” said Nicholas Antonio Mapa, associate economist at the Bank of the Philippine Islands.
Mapa pointed to the base effect of the 10.4 percent growth rate recorded in November 2013 remittances as another reason for the slowdown.
Cumulative figure up 6.2%
Despite this, the cumulative amount of personal remittances in the 11 months to November rose 6.2 percent to $23.37 billion from $22.95 billion in the same period in 2013.
“Steady growth in personal remittances for the first eleven months of the year was supported by the sustained expansion of remittance flows from land-based workers with work contracts of one year or more (5.3 percent), as well as sea-based and land-based workers with work contracts of less than one year (7.3 percent),” the BSP said.
Cash remittances up 2%
Remittances coursed through banks as cash increased 2 percent year-on-year to $2.12 billion in November from $2.08 billion a year earlier.
A breakdown of the figure for the 11-month period shows funds coursed through banks rose to $21.99 billion, or 5.7 percent from the amount sent a year earlier.
The central bank said cash remittances during the period from land-based and sea-based reached $16.9 billion and $5.1 billion, respectively.
The United States, Saudi Arabia, the United Arab Emirates, the United Kingdom, Singapore, Japan, Hong Kong and Canada were the major sources of such cash remittances for the 11-month period.