Weak US Dollar Affects Immigrants
13/02/2008
The falling dollar is in its sixth year of a long-term decline and has swept the value of the billions sent overseas every year by immigrants working in the United States.
Last year U.S. immigrant workers sent home about $42.8 billion of what economists call remittances - transfer of funds, the most from any country, according to the World Bank.
The dollar's ongoing decline is complicating things. To ease the effects of exchange rates, immigrant workers are already working longer hours, keeping costs down, and in some cases moving to Europe, where the euro is stronger.
Some fear a nationwide housing slump in the United States will further slow growth and push the dollar to new lows, making it even harder for U.S.-based workers to continue extending their lifeline to family members abroad.
"In terms of remittances, the fall in the dollar has hurt some of the world's poorest the most because it affects the value of the money that migrant workers send back home to their families," said Dilip Ratha, senior economist at the World Bank in Washington.
Estimates put global remittances at about $300 billion, three times the amount that rich nations give in aid to developing countries. The real amount is almost certainly higher but impossible to calculate since migrant workers often send money through informal channels to cut costs.
The top four recipient countries are India, China, Mexico and the Philippines. In a stark example of the declining purchasing power of the dollar, Filipinos working in the United States are finding that every $100 sent back home is worth 1,000 pesos less than it was just two years ago. Rising food and energy costs in the Philippines are also making it difficult to cope with unfavourable exchange rates.
COPING WITH THE DOLLAR
According to the Federal Reserve, in the last six years, the dollar has fallen about 22 percent against 26 currencies weighted by trade importance. The slide last year accelerated, especially against the currencies of developing economies such as Brazil and India, because of slowing U.S. economic growth.
"I would not be surprised to see an upsurge in migration to Europe and to Canada, where their currencies have been strengthening," said Dean Yang, economics professor at the University of Michigan.
The number of Latin Americans in Spain has almost tripled to 1.8 million in the last five years, the Inter-American Development Bank said in a recent report. Meanwhile, the euro has appreciated by 24 percent against the dollar since launching in 1999 and reached an all-time high last year.
If the dollar continues in this manner, it will make life difficult for immigrants, who will have to sacrifice a lot in order to send money back home. (Reuters, New York)
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