How finance folk use it
In its most basic form, remittance is when someone sends money from one country to another. In the Philippine context, it normally means overseas Filipino workers (OFWs) converting the money they earn in their host country to Philippine pesos and sending them to their families in the Philippines.
In some cases, money can be sent without being converted. For example, US dollars can be sent straight to dollar accounts in the Philippines.
Is it good or bad?
Besides helping countless families all over the Philippines, remittances also help boost the Philippine economy. This is because, when more families have money to spend, this gives more opportunities for businesses to grow.
Remittances also help strengthen the peso to a certain extent.
What it means for you
If you’re the recipient of remittances, then you have the opportunity to save or invest this money sent by your relatives abroad.
If you’re the one sending remittances, then watch out for two things: fees and exchange rates. Sending money to another country doesn’t come free so make sure you know how much it will cost.
Besides this, depending on foreign exchange rates, it may actually be better to convert the original currency to US dollars first before converting to Philippine Peso. You’ll have to do a little math first, though.