OFW option to cope up with the peso-dollar forex trend

forexPhoto on left shows the Peso-Dollar exchange rate on November, 2003 photo courtesy of Agence France-Presse. Those were the days when the dollar value is at its best performance. Today however, the Peso-Dollar closes to 41.85Php - that is 24.73% lower !

The strengthening of peso against the dollar for the past 37 months is a good news in Philippine economic view but resulted to a very HARD BLOW for us OFWs.

Come and think of it. Let’s assume we are working on a certain company paying us in dollar in 2003. Five years later the exchange rate dropped from 55.60Php to 41.85Php today. That is a clear 24.73% decrease in our income. If you are going to consider the rising price of basic needs/commodities then it will surely be like a double knock-out punch for us.

What we should do to cope up with this forex trend?

Remit more dollars than before. This option really depend on how much an OFW can stash from his/her current income. This maybe the default option for OFW but can’t be done in most cases as there may not be much more to remit even if we wanted to.

Reduce family expenses. We send the same amount as we are sending 5 years ago, Since we can’t adjust on our side then our family back home should adjust their expenditures. For how much? In our forex example the forex dropped 24.73%, so can they have to reduce their expenses by 24.73%?.. This is practically improbable specially if you are going to take into consideration the inflation rate which is 5-6.4%!

Hedge against a further appreciation of peso. The possible option but how are we going to hedge and what intruments are we gonna use. DBP has a hedging program to shield against the strengthening peso. The minimum amount is $10,000!! do you think an average earner OFW can meet the minimum to join this program? Considering that majority of the 8.2Million OFWs belong to household worker and skilled workers.

What else can we do then? I think the best thing for us OFWs to do now is to be familiarized and be educated in the field of finance and investing. Explore the things and possible ways how to increase the value of our money.

Otherwise we’ll just have to sit and observe how the forex performance goes on. Well, looking in the peso-dollar forex chart I captured from yahoo finance webpage. Looks like it’s moving up… :) I hope it would.. hehehe.

forex2

money, ofw article, overseas filipino worker

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Comments
Comment by Remitter on May 16, 2008 @ 4:53 am
Couldn’t agree more on this. I think you have caught the pulse of the problem here. Yes, it is indeed impossible for an average OFW to meet the minimum of the Hedge Fund program something I have mentioned on http://onlineremit.blogspot.com/. The OFWs should have been educated about finances and investmenst long time back which could have helped them and the economy which is crippling. But a lot can be learnt even now when the OFWs are facing stiff challenges in foreign countries. Given the kind of problem they are going through right now it is improbable to suggest that they should send more dollars. According to reports, some are already being laid off while some are expecting the pink slips. Reduction of expenses is also next to impossible, given the rising prices of all goods. Better financing and careful investments are the best options.
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