Remittances up 7.6% as host countries open

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    As host countries began easing lockdown measures, money sent home by overseas Filipinos (OFs) went up again in July, but the cumulative year-to-date total is still $400 million lower than that of last year.

    Data from the Bangko Sentral ng Pilipinas (BSP) showed cash remittances that are coursed through the banks rose by 7.8 percent to $2.783 billion from $2.581 billion during the same month last year.

    Benjamin Diokno, BSP governor, said the growth was mainly “due to the 12.6 percent increase in land-based workers remittances, but was slightly tempered by the 9.2 percent decrease in sea-based workers’ remittances.”

    Diokno explained that sea-based workers were repatriated amid the ongoing coronavirus pandemic.

    For tJanuary to July, the cumulative decline in cash remittances decelerated to 2.4 percent from 4.2 percent in June. Year-to-date total now stands at $16.8 billion compared with $17.2 billion in 2019.

    Cash remittances from land-based and sea-based workers continued to be lower than their levels in 2019 by 1.5 percent to $13.232 billion from $13.429 billion, and 5.8 percent to $3.57 billion from $3.789 billion, respectively.

    Nicholas Mapa, ING Bank senior economist, said “most analysts had expected remittance flows to contract given challenging labor market conditions in host countries and given the fact that more than 170,000 OFs have returned to the Philippines over the course of the past few months.”

    He said the surprise jump in remittances may be traced to the lifting of strict lockdowns in host countries, “which allowed OFs to return to work and remit funds after being trapped in their homes for an extended period of time.”

    “One other reason for the 7.8 percent increase in remittances could be traced to exchange rate nuances with the US dollar retreating significantly against global currencies, inflating remittances sent home in euro and yen in dollar terms,” Mapa said.

    “We continue to pencil in a return to weakness or at best a moderating in the growth posted in the past two months as job market challenges and layoffs make it difficult for OFs to send home more funds in the coming months,” Mapa said.

    But despite the projected weakness in remittance growth, Mapa said the peso “should remain well-supported as the current account remains in surplus due to the freefall in imports.”

    “Should remittance growth continue to surprise on the upside, we expect only modest appreciation pressure as BSP will likely take the opportunity to build up its gross international reserves past the $100 billion mark,” Mapa said.

    By country- source, BSP said remittances from the United States, Japan, Singapore, Qatar and Taiwan were among the countries that registered continued growth, while declines were noted in Saudi Arabia, United Arab Emirates, Germany, Kuwait and the United Kingdom.

    The highest share to total OF remittances at 40.1 percent for January to July emanated from the US, followed by Singapore, Saudi Arabia, Japan, UK, UAE, Canada, Qatar, Hong Kong and Taiwan.

    The combined remittances from these countries accounted for 78.9 percent of total cash remittances.