The Foreign Currency Exchange Market in the Philippines

When it comes to the foreign currency exchange market, the only thing I’m concerned about is how many pesos to the dollar (the current exchange rate) I can get when I visit one of the foreign currency exchange locations in Olongapo – the money changers. I always avoid usage of the word “forex” because it’s most commonly associated with foreign currency exchange trading.

Foreign Currency Exchange Trading

The reason that exchange rates fluctuate all the time is because money (in my case, US dollars and Philippine pesos) is traded on the open market (the stock exchanges) as a commodity just like any other commodity and referred to as “forex”. I honestly don’t know how it all works and I’m not in the market (pun not intended) to find out.

It’s obvious the foreign currency exchanges are involved in that kind of exchange trading or they wouldn’t be making any money providing the service. As far as I’m concerned, I would be happy if the exchange rate would simply stabilize at one rate so that I know how much “effective” money I have to spend every month.

Foreign Currency Exchange Broker

At one time, it seemed like there were foreign currency exchanges all over Olongapo City. That was back before the US military departed in 1992. Nowadays, there are only a few and I only know of two locations and I’ve used both. My mother-in-law uses one that I’ve never been to and it’s located at the Olongapo City Public Market. Regardless of what the money changers call the places, each one is nothing more than a foreign currency exchange broker.

The way they make money is that they give you a slightly lower exchange rate (usually 5 to 10 centavos) than what the stock exchanges are showing it as at that particular time. I don’t know the details of how it’s done; I just appreciate the final result of the money exchange transaction. At one location, I usually get a better rate than at other places because I go there so regularly.

Remittances and Foreign Currency Exchange

One thing I’ve learned over the past four years is that there are some places where you don’t want them changing dollars into pesos. The foreign currency exchange broker will usually give a better rate than the banks will if you’re receiving dollars through remittances at a bank, but it’s usually not enough to matter.

Places that specifically receive remittances, outside of banks, are usually the worst places to use. Western Union is one example. Not only does the sending party have to pay a transfer fee, the receiving party also has to pay some kind of fee (and I don’t remember what it’s called). On top of that, Western Union offers an exchange rate than can be up to one peso less than anywhere else. Now, it’s been a few months since I’ve received money via Western Union, so it may have improved since then due to competition.

Some of the online remittance services, like Xoom and RemitHome, offer better transfer fees than Western Union. The only problem I have with them is that I have to visit a bank or some other location they send to and it’s so much easier to get in and out of the Western Union offices than it is at most of the banks. Of course, I hear that getting in out of Banco de Oro (BDO) is pretty easy. BDO seems to be opening branches all over the place and they already have a branch at the Subic Bay Freeport Zone.

What’s your experience?

I would be more than interested to hear if anyone gets money exchanged in an easier or better way than I do. I visit the Philippine National Bank branch in downtown Olongapo once a month and it’s usually very crowded. Sometimes I let them change my money to pesos, but not very often. It depends on how long I anticipate waiting. Usually, I just take the dollars and stop by a money exchange before heading to the Subic Bay Freeport Zone to do my grocery shopping. That’s going to change next month.

The last time my wife joined me for shopping at the Royal Subic store, we both noticed the exchange rate is better there (during the purchase) than it is anywhere else. I’ll be paying with dollars next time and what’s left over when I leave is what I’ll be changing to pesos at a money exchange, but not necessarily in that order because I have a pretty good idea of how much my total spending amount will add up to before I even get there.