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« on: December 11, 2007, 11:02:12 PM »
Updated: 10:40 PM, December 11, 2007- Top Stories More OF families putting money into savings -BSP
12/11/2007 | 04:47 PM

 More recipients of remittances from overseas Filipinos are putting money on savings, an official of the Bangko Sentral ng Pilipinas has observed.

The savings rate among families of overseas Filipinos have been increasing steadily, indicating a gradual shift in their allocation of household resources, according to BSP deputy governor Diwa Guinigundo.

He cited the result of a recent BSP survey, showing a steady increase in the number of households that set aside part of their resources for savings instead of spending on consumer goods.

Although the increase was not dramatic, Gunigundo said it has become an established trend since the BSP started surveying households for the central bank's quarterly Consumer Expectations Survey.

Guinigundo noted that about 7.2 percent of OF households reported setting aside money for savings in the beginning of the year. This has since increased to 15 percent in the second quarter and to 19 percent in the third quarter.

The BSP survey did not capture the actual amounts being set aside or what proportion of total household income goes to savings.

Gunigundo said future surveys would go into expenditures with more details.

The BSP has been trying to tap the huge resources of OF households and mobilize at least part of huge inflows that were otherwise spent on consumption.

Last year, overseas Filipinos remitted a total of $14.6 billion, including $12.8 billion coursed through the formal banking channels. This year, remittances through the banks were projected to hit $14.6 billion.

The same BSP survey showed that bulk of the remittances was spent on food and other household needs, education, debt payments medical expenses, consumer durables and others.

Only small portions of OF remittances actually go into savings or are put into investments that would generate more income.

"This is a huge resource that is largely untapped and what OFs really need is to become more familiar with their financial options," according to BSP governor Amando M. Tetangco.

The BSP approved last week the hedging facility proposed by the Development Bank of the Philippines (DBP) especially for overseas Filipino workers.

The facility was previously open only to exporters, but the Monetary Board decided it would allow DBP to open the window to OFWs as a hedge against foreign exchange fluctuations, Tetangco said.

The plan would allow the DBP to set the peso-dollar exchange rate at a pre-agreed level and OFW beneficiaries would be able to avail of the facility as a hedge against fluctuations.

DBP would be allowed to trade, hedge and sell dollar-to-peso non-deliverable forwards (NDFs), peso-dollar currency options and peso-dollar outright forwards, the BSP governor said.

"These are plain vanilla instruments covered by the usual regulations," Tetangco said.

DBP has already expanded its original $1-billion hedging facility that would now covers OFWs in the wake of the clamor for the government to take steps in shielding OFWs from the rapid appreciation of the peso against the dollar.

Under the DBP plan, OFW families could go to the Overseas Worker Welfare Administration, the various manning or crewing agencies and similar organizations to avail themselves of the facility on their behalf.

The facility has been open to exporters but DBP officials said there had been an initial reluctance to avail of the hedging tools mainly for lack of experience. - GMANews.TV


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