Overseas Money Reinforce Local Currency
Apparently, it has always been this way: the life-saver of the Philippine economy is the Filipino overseas contract worker. As early as the 1970's, the Filipino engineer has sought for greener pasture in the sands of the Middle East, Saudi Arabia specially. Today, there are about seven million overseas contract workers spread over 129 countries. Their average remittances range along six to seven billion U.S. dollars a year.
In 1997, when the instant economies of Asia cracked, the Philippine market surprised analysts for its ability to withdraw itself from certain depression. And in the years, that followed, it was observed that the Christmas season was the greatest time of market recovery because of a sudden surge of dollar inflow caused by overseas dollar remittances.
As of 2005, OFW remittances registered a whopping $10.85 billion. These figures have brought the OFW a solemn respect from Philippine economists. Admittedly, human resources have become the country's best export. Even the World Bank agrees that the Philippines' abundant supply of educated, English-speaking workers is its best bet to rapid development. The workers are noted to be well-educated, conversant in the English language, and display tremendous potential in the electronics and business services industry.
Monetary authorities continue to closely monitor overseas dollar remittances because it provides the needed boost in the value of the Philippine peso, according to an article in the Manila Bulletin dated January 10, 2004. According to the report, holdings of foreign currency deposit units, or FCDU's, were at $13.066 billion as of December 19, 2003, an $87.98 million increase from the previous week's $12.978 million.
This influx proved to be a great buffer for the country's economic situation during its time. As of the entry of 2004, the Philippine peso stood at $55.29 against the dollar, slightly depreciating ten points from the previous day of trading. The decline was caused by the depreciation of the Japanese yen, the Asian currencies' fulcrum; and the higher demand for the dollar from oil companies from which the U.S. had received its oil imports. Without the reinforcement of the OFW remittances, the Philippine economy would have received a beating.
At the end of 2003, Philippines' gross international reserves stood at $16.815 billion, providing ample funds to cover around five months of imports and other dollar-denominated transactions.