TUCP Urges OFW To Save Pesos, Not Dollars

MANILA, Philippines (Mindanao Examiner / 29 Jul) – The Trade Union Congress of the Philippines has urged overseas Filipino workers and their families to keep their savings in pesos, saying the local currency is bound to gain more strength against the American dollar in the months ahead.

"We are just looking out for OFWs and their families here. There is definitely less risk and greater potential reward in peso investments going forward," TUCP president Democrito Mendoza said in a statement sent Sunday to the Mindanao Examiner.

He said: "OFWs and their families here stand to lose more value for their money if they continue to stash whatever savings they have in dollars, or in dollar-denominated instruments."

Mendoza made the statement shortly after JP Morgan Chase & Co. told its clients to buy the Philippine peso, and the Development Bank of Singapore (DBS) predicted an even stronger-than-expected peso over the next 18 months.

The DBS said it now sees the peso closing at 44.50 versus the dollar by year's end, and 42.50 by the end of 2008.

Previously, the DBS saw the peso closing at 45.50 versus the dollar by year's end, and at 43 by the end of next year.

"There is no sense in keeping dollars now. This is not just about the peso getting basically stronger. This is more about the dollar itself getting fundamentally weaker versus most other currencies," Mendoza said.

"The government's improved financial position, massive OFW remittances as well as increased tourist spending and foreign investments here are all factors propping up the peso.”

“But worldwide, there is far greater supply of dollars now and much less demand. This is why the dollar is getting weaker," he said.

Mendoza, meanwhile, stressed the need for the government to push down remittance charges in order to help OFWs cope with the rising peso.

"This is one concrete way by which the government is in a position to intervene, in terms of creating a regulatory environment that will drive down excessive money transfer charges," he pointed out.

A previous study by the Bangko Sentral ng Pilipinas showed that a typical $400 to $600- remittance from a US or a United Kingdom bank to a Philippine bank costs from $7.09 to $11.73. A $200-remittance from Hong Kong costs $3.11 to $7.45 per transaction.

Mendoza also said the TUCP would support the government's plan to float OFW bonds. "If the bonds will mean that OFWs will have ready access to higher-yielding investment instruments, then we are all for it," he said.

Since dropping to a low of 56.04 to a dollar in 2004, the peso has surged by more than 18 percent, closing at 45.72 versus the US currency on Friday.