Remittances grew in April—but not fast enough to buoy peso

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Remittance flows from overseas-based Filipinos grew for the second month in a row in April, rising by 3.8 percent to reach $2.67 billion, according to the Bangko Sentral ng Pilipinas (BSP).

This brought January-April inflows to $11.32 billion, an increase of 2.6 percent from $11.03 billion in the period of 2021.

Of such amount, cash remittances or those funds that were sent through banks accounted for $10.12 billion. This meant an increase of 2.7 percent from $9.9 billion previously.

In April alone, cash remittances grew by 3.9 percent to $2.4 billion from $2.3 billion.

Overall growth of remittances in April was faster than the 3.6 percent that ING Bank had projected for the month.

“Remittance flows have proved to be extremely resilient, even at the height of the COVID-19 pandemic in 2020,” said the ING Bank’s team of analysts, including senior Philippines economist Nicholas Mapa.

The bank noted that aside from boosting consumption among recipient households, remittances provide an important support for the Philippine peso.

The local currency is now trading at more than P53 against the US dollar, the peso’s weakest position in about three and a half years.

“Despite this consistent source of foreign currency, the pace of remittance growth may only partially offset the stark widening of the trade deficit, with the Philippines now running a consistent current account deficit,” ING Bank said.

The Philippine Statistics Authority earlier reported that the Philippines’ trade deficit in April surged by 54 percent to $4.77 billion.

Further, ING Bank said that while results for April inflows might provide some relief for the peso, “don’t expect it to reverse the current depreciation trend.”

Meanwhile, global money transfer firm WorldRemit said it was taking steps against cybercrimes to keep money transfer transactions safe.

“WorldRemit ensures that international remittances are not just convenient and accessible for our customers, but most importantly, safe and secure amid rising cases of cyber fraud incidents in the Philippines,” WorldRemit country director Earl Melivo said in a statement.

He said WorldRemit was refusing to work with correspondent partners who lacked effective controls for combating fraud and financial crime.

The company also implements additional risk-based controls for customers who need to send to destinations where there is an elevated money laundering or terrorism financing risk.