MANILA, Philippines – The Bangko Sentral ng Pilipinas (BSP) has brushed aside the decline in the amount of money sent home by overseas Filipinos last August as it expects remittances to pick up in the last quarter of the year.
BSP Governor Amando Tetangco Jr. said the government is sticking to its five percent growth target for remittances this year amid the slight decline in August.
“It is a one-time drop in the growth rate. We will see, we will stick with the five percent target,” he said.
Cash remittances went up by 5.9 percent to $24.35 billion last year from $22.98 billion in 2013 while personal remittances increased by 6.3 percent to $26.97 billion from $25.37 billion.
However, cash remittances rose by only 4.1 percent to $16.21 billion in the first eight months of the year compared to $15.57 billion in the same period a year ago.
The amount of money sent home by Filipinos abroad to their loved ones in the Philippines declined by 0.6 percent to $2.04 billion in August from $2.06 billion in the same month last year due to the depreciation of the euro, Canadian dollar, and the Japanese yen against the US dollar.
This was the first time in more than 12 years that the amount of money sent home by overseas Filipinos declined. Remittances contracted by 10.9 percent in April of 2003.
Other currencies have been weakening against the US dollar amid the impending interest rate hike by the US Federal Reserve that is putting renewed pressure on emerging economies with investors withdrawing their cash to seek better returns in the US.
The global economic slowdown led by China is causing uncertainties in the global financial markets.
Tetangco reiterated that Filipinos abroad are expected to send more money to their loved ones in the Philippines this quarter in preparation for the Christmas holidays.
He added exchange rates tend to stabilize towards the Christmas season.
“Part of the reason of the drop is the weakening of third currencies against the US dollar. So when you convert let us say the third currency to the US dollar, you get a smaller US dollar value,” Tetangco said.
The BSP chief pointed out the demand for skilled Filipino workers continues to increase.