King dollar commands surge in remittances

King dollar commands surge in remittances
Harish Sridharan https://www.reuters.com/markets/currencies/king-dollar-commands-surge-re...

Nov 10 (Reuters) - Seafarer Jhan Kharl Rodica recently returned home to Manila after an eight-month voyage and bought a townhouse outside the city, courtesy in part, he said, of the U.S. dollar's best year in a generation.

A marine engineer who worked at an oil tanker around Africa and Asia this year, Rodica is paid in dollars and has been wiring extra cash back home - part of a worldwide trend that has driven a surge in remittance volumes as the dollar has climbed.

3 minute readNovember 10, 20225:41 PM GMT+8Last Updated an hour ago
King dollar commands surge in remittances
By Harish Sridharan
A picture illustration shows U.S. 100-dollar bank notes
A picture illustration shows U.S. 100-dollar bank notes taken in Tokyo August 2, 2011. REUTERS/Yuriko Nakao/File Photo
Nov 10 (Reuters) - Seafarer Jhan Kharl Rodica recently returned home to Manila after an eight-month voyage and bought a townhouse outside the city, courtesy in part, he said, of the U.S. dollar's best year in a generation.

A marine engineer who worked at an oil tanker around Africa and Asia this year, Rodica is paid in dollars and has been wiring extra cash back home - part of a worldwide trend that has driven a surge in remittance volumes as the dollar has climbed.

The cash is well received in countries, such as the Philippines, where living costs are soaring, providing a lifeline for families and even some smaller economies that depend on it. The World Bank estimates remittances to low and middle-income countries will rise 4.2% to $630 billion this year, and the flow is another sign of the far-reaching consequences of the dollar's gains.

The U.S. dollar index , which measures its performance against a basket of major currencies, is up 14.5% this year.

It has climbed more than 20% against some smaller currencies that see sizeable remittance flows, such as the Bangladesh taka or Pakistani rupee , which is encouraging workers to send extra cash.

"When there is strength in the U.S. dollar, often we see an increase in new U.S. customers... as well as customers in certain markets seizing the opportunity to get more local currency home," said Pankaj Sharma, executive vice president for global remittance business management at Remitly.

Transfer volumes at Remitly (RELY.O) leapt 44% to $7.5 billion in the September quarter. Larger rival Wise (WISEa.L) said volumes were up 49% to 24.4 billion pounds ($28.2 billion) in the July quarter. Wise shares have more than doubled since July.

MoneyGram International (MGI.O) and PayPal Holdings (PYPL.O) have also posted an uptick in turnover and transactions in their third quarter.

The jump is all the more noteworthy as remittances, rooted in necessity, have long been steady and reliable flows, and more sensitive to employment and growth than currency moves.