I knew I wasn’t alone!

OFWs and ‘Uncomfortably Strong’ Peso

Inquirer Feedback, 05/29/07

THIS is a reaction to Mr. Neri’s irritating remarks from your column, part of which reads: “When asked about the families of overseas Filipino workers, who are likewise adversely affected by the peso’s strengthening, Neri said: ‘Well, they are not being taxed anyway, so that’s their consolation.’

“‘Also, OFW remittances are getting higher anyway,’ Neri said. ‘Remittances are increasing because there’s an upgrade on the quality of jobs.’”

First thing, Mr. Neri should not “brag” about OFWs not being taxed; lest he forget, remittances from the OFWs keep the country’s head above high waters. Second thing, indeed remittances from OFWs are increasing simply because more and more Filipinos leave the country to work abroad.

Mr. Neri’s statement on increased dollar remittances due to upgrades in the quality of jobs is inaccurate. It’s just a matter of ratio and proportion; the more Filipinos leave the country to go work abroad, the more the influx of dollar remittances to the country.

Now why do people leave the country, everyday, to work abroad? Because they don’t see a good future for their family if they just stick around and wait for the Philippine government to give them the opportunity to have one. It’s sad, but it’s the truth!

Indeed OFWs are adversely affected by the strengthening peso because prices are not going down accordingly, which virtually makes the nature of the strengthening peso superficial. With the current exchange rate, OFW’s practically lost about 10 percent of their income compared to fourth quarter of 2001 rates, and approximately 20 percent from September 2004 rates.

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– Jeoffrey Bautista, Al-Khobar, Saudi Arabia (via e-mail)

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I actually consulted a couple of relatives working in the banking/finance sector about this ‘dilemma’. Both of them say that the higher inflow of remittances along with the weakening of the US dollar itself are the major factors behind the strengthening of the peso. Ergo, the government can’t really take any kudos for the now almost P45=$1 exchange rate.

While I am suffering over this – since I’m effectively earning less with prices apparently not going anywhere down – I try to simply look at it this way: Sometimes you’re up; sometimes you’re down. When the peso plummeted to P56=$1, OFWs and exporters rejoiced while importers sunk deeper into debt. Now, it’s the importers turn to rejoice, while we learn to tighten our belts. In other words, weather-weather lang ‘yan.

In any case, my uncle says his bank’s year-long forecast is for the peso to stabilize at P47 =$1 by the end of the year. I’m good with that.

The joys and pains of owning a car

Over the weekend, I gave my trusty car some much needed loving. It has been creaking and groaning for some time now, and I only recently had enough money to attend to it.

Now, after P18,000 (ouch!) worth of repairs, it practically drives like the day it came out of the store 10 years ago. The total damage was P3,000 over my budget, but it was well worth it.

The breakdown:
Engine support – P5,200 (a replacement 2 years overdue)
Tie-rod ends – P3,300 (the wiggle was scary already)
Other underchassis stuff – P1,000
New tire – P2,800 (the one I replaced was in danger of blowing up anytime already)
Brake light bulb – P150 (it has been blind for several months now)
New tint – P2,800 (it still had the much-faded original tint on)
Steering wheel cover – P250 (leather was breaking apart)
Wiper blades – P500 (needed new ones in time for the rainy season)
Labor – P2,000

Pure and safe driving pleasure: Priceless =)

Over the next couple of months, I still have about P10,000 worth of car-related expenses (tune-up, change oil, registration, etc), but the car is a necessity to me and my family. It’s a worthwhile expense for me.

Honey, they shrunk my salary!

Markets cheer peaceful conduct of polls
Peso breaks into 46:$1, stocks hit 10-year high

By Doris Dumlao, Elizabeth Sanchez-Lacson
Inquirer, 05/16/2007

MANILA, Philippines — The peso Tuesday broke into the level of 46 to the dollar for the first time in six years as financial markets cheered the peaceful conduct of Monday’s midterm national elections, traders said.

Stocks surged to a fresh 10-year high, catching up with similar rallies in the region, with the key Philippine Stock Exchange index gaining 1.3 percent to 3,408.73, the highest since it reached a pre-Asian crisis level of 3,447.6 points on Feb. 3, 1997.

Waaahhh! My salary just got smaller again! Gone are the days when earning in dollars was something to aspire for!

$ versus PhP

I woke up the other day with a nightmare: I dreamt that the Philippine Peso strengthened so much that $1 became equal to Php1! Since I earn 90% of my income in US$, that was indeed a huge nightmare!

Fortunately, I did wake up and realized that half the population of the country (exporters and OFWs and their families) would go up in arms if ever that happened. But it got me thinking: do I save/invest in US$ or Philippine pesos?

Over the past several months, the peso has steadily strengthened, which means that my salary is effectively getting tinier with each day. As we all know, the exchange rate is influenced by a host of factors – local socio-political situation, OFW remittances, international economic situation, etc. So what do I do? Can anybody out there predict where this trend is headed?