Tuesday, July 16, 2024
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UAE: Will Rising Dirham-Peso Exchange rates Result in More Remittances?

The exchange rate between the UAE dirham and the Philippine peso has almost reached P16. This implies that a Filipino expat who sends their family in their native country Dh4,000 (Php64,000) monthly will easily receive Php8,000 more in remittances than they did three years prior when the exchange rate was roughly Php14 against the dirham.

However, the seemingly good news of a high dirham exchange rate is, according to 47-year-old Filipino chef Rudy Gamit Galorport, “just an illusion because it is not felt in terms of real value as prices of goods and services back home have increased rapidly,” eating up any growth in the remittances his family is currently receiving.

Galorport told the Times that he is now sending extra dirhams to pay for utilities and groceries. I used to send roughly Php30,000 or Dh2,150 in the past (dh1=P14 at the dirham-peso exchange rate). But now that food, electricity, water, and transportation costs have increased, I must send at least Php40,000, or roughly Dh2,500, every month.

According to Dr. Rommel Sergio, author of a book and associate dean of Graduate Studies at Canadian University Dubai (CUD), the phenomenon of getting more value for money as a result of a higher exchange rate is known as the “money illusion” in behavioural economics. He told the Khaleej Times this.

The situation in which rising living expenses offset a rise in salary or remittance is not specific to Filipino expatriates; it is a universal phenomenon affecting workers everywhere. South Asian expats receive more money when they send their salaries home because the value of the Indian and Pakistani rupees has decreased, as has the UAE dirham. However, that does not imply that their purchasing power has grown, Dr. Sergio added.

Also Read:

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Tuesday, July 16, 2024

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