The Bank of the Philippine Islands is encouraging overseas Filipinos to maximize their dollar earnings by taking advantage of the high peso-dollar rate.
“One sector that greatly benefits from the strong dollar is the overseas Filipinos,” says Ritche Fariñas, head of BPI retail banking group’s overseas Filipino segment.
“The higher conversion means their beneficiaries will have more money to spend. These workers abroad may not get any salary increase, but because of the exchange rate, whatever they send back home is bigger,” Fariñas says.
The strong dollar performance is due to higher interest rates in the US, with the exchange rate hitting a monthly average of 52.2 pesos to a dollar in May. Contracting remittances also contributed to the weakening of the peso. According to the Bangko Sentral ng Pilipinas, remittances went down 9.8 percent in March, the lowest in 15 years.
Fariñas, however, says he is optimistic that remittances will pick up by the end of the year, and that peak cycles in remittances may have shifted because of the change in schools’ academic calendars.
“An overseas worker usually gets his salary and remits it to his family, where it gets converted to peso immediately. The OF can play the forex market by waiting when the exchange rate is high before remitting and converting to peso,” he says.
Another way to make the most of the peso-dollar rate is to open separate accounts for the remitter and their beneficiaries, and accounts in two currencies, one for peso and one denominated in foreign currency used to pay their salaries.
“This in itself is a form of portfolio diversification, where a client is not purely just in peso but has forex exposure as well,” says Fariñas.
He says banks like BPI offer clients access to their online foreign exchange, or FX services so they can convert US dollars into pesos in real-time. Preferred clients, for example, get better rates for their forex conversion.
There is also access to virtual relationship managers, or RMs, who serve as their point of contact for assistance and advice when opening an account, making a transaction or creating an investment portfolio. These RMs can be reached through email, Skype or Viber.
“Not all overseas Filipinos may know about bank services that can help them manage and invest their money well. With the strong dollar, they may as well get to know how banks’ FX services can help them make wise financial decisions,” says Fariñas.