THERE was a slight increase in the amount of remittances made by overseas Filipino workers and other Filipino expatriates in the United Arab Emirates to their loved ones back in the Philippines. Although this increase is minimal, it does show that a large number of Filipinos would want their relatives and loved ones to feel the wind fall of a higher exchange rate compared to last year’s.
The dirham was trading, as of August 15, at PhP 13.90, while the greenback was pegged at PhP51.37. These high exchange rates are more than enough reason for Filipinos to start sending home more of their hard earned money back to their beneficiaries in the Philippines. After all, isn’t a higher exchange rate good for them?
At first glance, this high exchange rate would seem to be heaven sent for the millions of Filipinos relying on their OFW relatives. Doesn’t this mean that more pesos can be had for every dirham or dollar sent back home? Doesn’t this mean that they would have more pesos to use to purchase their needs and the rest?
Our complicated and enmeshed economic system would eventually prove this down to earth thinking is false.
Firstly, although every dirham or dollar sent home does mean more pesos, this is fleeting. A higher exchange rate would eventually affect the entire national and local economies. This is largely because, as an importing country, the Philippines also has to use more pesos to buy essentials from overseas.
Take the transport industry for example. Already, a jeepney transport group in the Philippines has called for an increase in fares from PhP8 to PhP10 for the first four kilometers. Why? Because the country imports oil and since the dollar exchange rate has already breached the PhP50 mark, it will take more local currency to buy every barrel needed to keep the jeepneys running.
Aside from oil and oil-based products, other industries are also adversely affected directly by a devalued peso. The baking industry for one also imports flour, the textile industry is also heavily reliant on imports to keep running. And other food items will also feel the pressure of a lower valued peso, soon.
Soon as well, the domino effect of a devalued peso will be felt throughout the land. Once jeepney fares increase, wouldn’t the take-home pay of ordinary Filipino workers be also affected? Once oil becomes more expensive, wouldn’t electric prices also follow suit? And with the pandesal increasing in price, wouldn’t prices of other food items also increase?
Yes, there is logic in believing that a higher exchange rate would be beneficial for our loved ones. This situation would allow our relatives to have more pesos in their hands. But all these benefits would wash away as soon as the prices, especially of basic commodities, start to rise as well. If this situation is not curbed the soonest, then the country is headed towards dire times indeed.
This is not to say that OFWs should not send their remittances at this time. On the contrary, the more they should send the earnings home because every dollar, or dirham, or riyal sent back home would keep the economy afloat and stop it from sinking altogether.
By all means send your remittances home, send more and more. But with the sending must also come the advice to the beneficiaries to be more prudent in their spending. For to truly cash in on this looming adversity our country faces, it is important to be more pragmatic in their spending and more mindful of saving.