Filipinos in Australia, Canada Earning More
Filipinos living or working in Australia and Canada now have higher purchasing power than their counterparts in the United States, as the US dollar fell to its lowest level against other major currencies in years.
The US dollar was equivalent to P51 a decade ago. A Canadian dollar was worth P33 while an Australian dollar was trading at just P26 in 2001.
Since then, most currencies have appreciated against the US dollar, regarded as the world’s reserve currency, as the gravity of economic power tilted from the US to other parts of the globe.
The Australian dollar now fetches P45.30 while a Canadian dollar trades at P45 in the spot market. The peso closed at a five-month high of 43 against the US greenback on Friday.
This means money from Canada or Australia are now more valuable than those sent from the US in terms of their peso equivalent.
Large inflows of foreign capital into emerging markets have allowed Asian currencies, including the peso, to appreciate against the US dollar, according to the Asian Development Bank.
“To cope with international commodity price rises, Asian economies generally have shown greater willingness to let their currencies appreciate, particularly after June 2010,” the ADB said.
Bangko Sentral reported that the peso gained 5.4 percent against the US dollar in 2010, as it moved in tandem with other Asian currencies.
“The peso’s strength was supported by sustained strong inflows of overseas Filipino remittances, portfolio investments, receipts from exports, tourism, and business process outsourcing transactions,” Bangko Sentral said.
Bangko Sentral Deputy Governor Diwa Guinigundo, however, clarified that the bank had no bias for or against a stronger peso, saying it merely intervened in the foreign exchange market to temper volatilities.
The bank said it “will continue to adhere to a market-determined exchange rate and will pursue initiatives that will allow further foreign exchange flexibility particularly in the face of surging capital inflows.”
It said it will also try to keep a comfortable level of international reserves, which could serve as a precaution for and insurance against external shocks.
Bangko Sentral’s accumulation of foreign exchange reserves, amounting to more than $66 billion as of end-March, helped temper the appreciation of the peso in the first quarter of 2011.
But the biggest gainer was the value of gold, which hit a new record high of $1,460 per ounce last week, as investors sought the safety of the bullion market to flee from the volatility of the US dollar. The value of gold has nearly trebled over the past five years alone.
Spot silver climbed to a 40-year high of $40 an ounce last week.
Source: The Manila Standard