BPO inflows, OFW remittances to prop up peso in Q4
Inflows from the Business Process Outsourcing (BPO) industry and remittances from Overseas Filipino Workers (OFWs) could help support the peso against the dollar in the last quarter of 2022.
During the 17th Philippine Summit, Department of Finance (DOF) Secretary Benjamin Diokno said that the two sources could come up with an additional income of $16 billion in Q4.
He added that if he were still the Bangko Sentral ng Pilipinas (BSP) Governor, “we’d use around $10 billion for the last quarter because I’m sure that there is some $16 billion coming in. So it’s not as if we are going to lose our reserves.”
The DOF chief also highlighted that the peso could return to the P55 level due to the expected influx of OFW remittances for the holiday season.
When asked for his comment on Diokno’s insight, ING Bank Senior Economist Nicholas Mapa said the projected $16 billion inflows could help support the peso.
However, he noted that the trade deficit is also expected to be sizeable by year-end as the country’s trade gap hit a record $6 billion in August.
“Thus, the projected inflows may very well be diluted or completely offset by a likely widening trade deficit,” Mapa explained.
Meanwhile, Rizal Commercial Banking Corp. Chief Economist Michael Ricafort stated that such measures would “complement and are consistent with the recent signals from the BSP about possible large hikes in policy rates, as well as increased intervention in the local foreign exchange rate market.”
