Just a quick heads-up for those thinking of converting some £'s to Peso's Mid-market rates are hovering around P72 with many remittance companies offering just over P72 Could be a good time to buy.
Not so sure that Sterling has appreciated particularly rather than the peso sentiment in the markets being hurt by the recent typhoons. I have XE on my phone and live tile dedicated to GBP/PHP I already sent some of this months allowance to them but I do have more to send next week, lets hope the rise sticks around for a bit. Given that it is the run up to Christmas, rates are going to start getting poor soon as OFW remittances peak for the Christmas season, so yeah good time to buy just now!
To me the idea that the rate will start to get poor before Christmas does not seem just and fair, dynamic exchange rates governed by demand, little naughty I feel.
The official forex market rate may not alter in response to OFW demand. However, the spread on that rate offered by common remittance companies may alter, rather like airline companies altering their prices during the school holiday season.
I'm going by personal experience over the last god knows how many years, the Philippines gets flooded with inward remittances of foreign currency at Christmas time that depresses the price paid.
It does happen oss you are 100% correct, I just do not think it is just. I remember a few years ago I was stuck in Glasgow when there was heavy snow blocking all the routes in and out of Glasgow. I managed to check in at a Premier Inn and day by day the price was going up because of the demand for accomodation, why is it that the prices do not go down when there is less demand? I must be getting old because I'm starting to moan a lot more like Dom does
2007, 2008 and 2009 saw significant drops from August to December 2010 wasn't great and neither was 2011. 2012 was flatish in the last 4 months of the year. 2013 was an exception as the pound was up a fair bit by Christmas 2014 saw a significant drop and here we are this year. 2006 was an exception and I remember having a great time over there that Christmas and feeling like a king http://www.xe.com/currencycharts/?from=GBP&to=PHP&view=10Y
I don't know enough about currency trading, I suspect John does, but for me I watch each year and each year the rate we get for the pound seems to climb towards the middle of the year and tail off towards the end, the long term trend for the pound has been down compared to PHP but that is a reflection of the improving Philippine economy more than anything else.
The salient point is 'the price paid'. You never receive close to the market rate on either bid or offer from a consumer forex provider like western union. You see significant differences in offered rate between different companies in different locations. If I was running an exchange company I would do the same. I would alter my margin during times of high demand in such a way as to maximise my profits. The spreads over the base rate offered by these companies are constantly adjusted for precisely that reason in response not only to the market price of the currency but also what the competition is charging, the demand for services, and in what direction the business is flowing. Their goal is purely to increase revenue. They are not interested in playing fair, being your friend or helping you to change money. So really, you're being hit, not only be fluctuations in the exchange rate, but by the policies of the consumer forex providers.
The Peso to pound graph doesn't make very good viewing does it unless you own a Tardis and can be transported back to 2006/7 I was in the Philippines in 2007 and yes I felt like a king, nowadays more like a pauper
I've been using PNB and iRemit for many years and can say that their remittance RoE is very very close to mid-market rates. Today both PNB and iRemit offer P72.05 https://www.pnbeonline.co.uk/ https://uk.myiremit-idol.com/
I think there needs to be some stronger regulation, from what you are saying they can charge pretty much what they like which is not good for us the consumer. Its like when we are at the airport, the exchange rates given there are absolutely shocking, we all know to avoid them but as we know it is not always possible I am quite sure though that the exchange companies can put some good spin on why the exchange rates are so poor at airports.
To quote an oft misused phrase, 'Its a tax on fools'. Their attitude is that if you don't like it, then go elsewhere. There are enough unprepared or uneducated people willing to pay it. If they see business falling off, they just reduce the spread until its sufficiently profitable again. They will have a computer model that will predict volume based on their margin and they will keep their margin just at the point of maximum return. Consumer goods are priced in shops in the same way. Certain goods (like food) are very sensitive to price fluctuation and hence are priced very close to cost (the market rate - if you wish). As for PNB and iRemit, don't forget that the rates that these companies can offer will not be dictated by what today's market rate is, although they may claim that as justification for their price. They will have have locked in a favourable rate via an option, a future or a bulk purchase of currency at a discounted rate, purchased possibly quite some time before at a rate more favourable to them. That means that the 'market' offered by these providers roughly tracks the official rate (it has to since otherwise people would use commercial forex) but it is always going to be at an advantage. The only way to beat that, is to use a commercial forex trading company yourself and move a large amount of money when you feel the rate is a good one. You can save quite a lot of money that way.
I think most of us are just converting modest amounts of £'s to Peso's as and when the need arises. Currency rates are always changing and it's nice to get a decent rate when you can. It's usually going to be far too much of a gamble to move large amounts whichever way you do it. Anyone who knows better wouldn't need to hold down a job
Of course its a gamble. These things always are. However, there are things you can do to minimise the risk. Most of these options are not open to domestic customers. Let me give you a simple example: In April you hold a large quantity of sterling that you want to convert to pesos. The rate is currently 67.85 You decide that in November of that year, you wish to convert the sterling to pesos at a rate of 72.65 or greater. You buy an FX currency forward contract which will guarantee you the ability to buy pesos at 72.65 in november and you pay a fee for it. The fee that you pay for that instrument will be based on what the issuer feels the rate is going to be on that date. They will essentially try and predict the future to price it. November arrives. If you are able to get a better rate than 72.65 then too bad, you do your transaction. If the market has fallen, you still utilise the forward rate. There is also the concept of an 'FX option' where you can choose not to actually use the contract. The upside of this is that you are not exposed to foreign exchange risk (and you can still have the reward if the rate rises above your strike price) but the downside is that the option is more expensive. Result. You are guaranteed a rate of 72.65 for a certain 'fee'. You have sacrificed a little of your 'upside' (if the rate rises) for an insurance on the 'downside' (if the rate falls). A similar sort of thing is done by mortgage companies offering fixed rate mortgages. They will buy a fixed/floating interest rate swap that effectively guarantees a fixed interest rate of say 3.5% on a pool of 100 million pounds for a term of 3 years. They will then lend out the pool of 100 million on a pool of fixed rate 4.0% mortgages, pocketing the 0.5% difference in interest for zero risk.
I didn't mean price paid in that sense, but I do take your point though. I track the market rate which is what XE and the likes report, the services I use tend to offer about 1 to 1.4 peso under the market rate and that has been consistent for many years, also the money changers I use in Manila tend to offer about the same sort of range when I change cash there, my local regular money changer will give me 1 peso off the market rate every time. What I would like to know is whether the large currency influx to the Philippine Islands is directly responsible for the shifts in the market rate at these times of year, as it certainly appears that way.
It's their market when you are at the airport and there is not a lot of competition, they are simple exploiting their position.
Yes. A currency 'future' is called a forward contract. A currency option is called an FX option. This concept can be applied to equities ('shares' in BT for example), commodities (such as oil), fixed income (such as bonds - US Treasuries for example) and swaps (such as fixed/floating interest rate swaps) too where an option on those is snazzily called a swaption.
Inflows of OFW remittances are a huge number. The BSP will tell you it's only one of a number of factors affecting peso appreciation / depreciation including all the other usual stuff like investor sentiment, GDP performance, inflation etc. In 2013 the OFW remittances totalled $25.35 billion In 2014 the OFW remittances totalled $26.93 billion In the first eight months of 2015 the OFW remittances reportedly registered a growth of 4.1 percent year-on-year to $16.2 billion These are not insignificant numbers getting pumped into the economy.
