Recent Improvement in the Dollar to Philippine Peso Exchange Rate
The dollar to Philippine peso rate is confusing the heck out of me in the last few days. The dollar has seen a slight increase. I don’t now what is causing that. It comes at a time when just the opposite would be expected. Perhaps I was too focused on just the increase in interest rates that the Central Bank of the Philippines approved this week. There are other factors that come into play. Let’s talk about some of those factors.
Recent Factors that Influence the Dollar to Philippine Peso
On Thursday, the Central Bank of the Philippines raised overnight interest rates. This increase just after their last meeting which also saw an increased in the overnight interest rate. I expected to see the dollar continue and even steppen its decline in the following days but that has not happen.
The dollar to Philippine rate has climbed back over the P43 mark. It is sad that P43 makes me happy now. It had fallen close to P42 just a few days prior to this. The interest rate increase in the Philippines should have caused a decline in the dollar. However, the interest rate is only one factor that determines this.
The unemployment rate in the USA increased a little in April from 8.8% to 9.0%. Perhaps that is seen as an indication that inflation fears may be further down the road than many expected. Oil prices are up today. Higher oil prices usually mean lower value of the dollar. Yet, the dollar to Philippine peso rate has improved slightly.
Perhaps the Bangko Sentral ng Pilipinas anticipated a sharp decrease in the dollar in the wake of their interest rate increase. Perhaps it moved aggressively to buy dollars to ease the decline. I don’t know, central banks don’t make it publicly known what their positions are in a currency until long afterward, if at all.
Increase in Minimum Wage In The Philippines
The only negative Ive observed for the Philippine peso is that an increase in the minimum wage in the Philippines, specifically in Luzon was increased on Friday. The increase in the minimum wage was only P13.35 per day or about 31 cents per day. Not per hour but day. That likely signals what the rest of the wage boards through the Philippines will do. Each region within the Philippines has its own minimum wage. Luzon has several different minimum wage rates in that province. The minimum wage in the Philippines is controlled by various wage boards. Each province has its own wage board.
Even a small increase in minimum wages tends to increase inflation. The Philippines has already seen higher than expected inflation this year and thus the interest rate increases by the central bank. Perhaps the small increase in minimum wage and the fears of inflation are pushing the value of the peso down.
However, I would have expected investors to have already anticipated the increase in the minimum wage of the Philippines and there is no new bad news on inflation. These factors should have already been factored into the dollar to Philippine peso forex.
However, the dollar to Philippine peso rate has only been improving for a few days. It is way too early to get excited. I’m a little excited because I thought it would head straight below 40 before we saw any improvement at all. I fear my excitement will soon be replaced with dread as the dollar to Philippine peso returns to its slow painful decline.
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Tagged with: Dollar To Philippine Peso • Exchange Rate • Forex • Minimum Wage In The Philippines
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“There are other factors that come into play”
I recomend also to consider silver and gold price tendencies in your calculations. IMHO this is a big deal in dollar strenght or weakness.
Greez
Hi Mike,
Thanks for bringing that up. I’ll go look now to see how the dollar is doing against gold. I know the current price but I don’t recall what it was two weeks ago. I wrote about that not long ago.
Gold and silver prices don’t influence the dollar. I was looking at what is causing the dollar to go up this week vs the Philippine peso. I’ve written quite a bit on how weak the dollar is. The reason’s why are obvious.
Gold prices this week have not changed much. I didn’t look closely at it but I did note that it was at 1475 and ounce on Friday. I was surprised. I thought it would be over $1500 by now.
I think if you look over my history of writing on this subject you’d see I do look at gold. Silver has been up and down like a yo-yo.
Gold is a good indicator of how the dollar is doing but it is not an indicator of what is influencing the dollar, that is the fundamentals behind the value.
I was also limiting this article to the dollar to Philippine peso. The dollar can fall horribly against the pound but that matters little to an expat living in the Philippines as long as it is going up against the peso. Likewise it could sky rocket above other currencies and still not benefit most expats living in the Philippines if it falling against the peso.
I should have provided an internal link to my other articles. I’ll grab that.
Here you go. Dollar to Philippine Peso
In a round about way, buying gold could lower the value of the dollar. Taking money out of bonds and saving to buy gold would put more into circulation so it does have an effect now that I think about. It still is not a fundamental in determining the health of a currency.
Gold is now over $1,500
1.00 XAU = 1,516.00 USD
The dollar is once again below 43 and is at 42.9 to 1 usd
It seems the short lived gain in the slight right of the dollar at the end of last week was due to the inflation rate climbed from 4.3 to 4.5 in April. That’s according to Bloomberg. I’m surprised such a small increase caused even a slight decrease in the value of the peso. The dollar had some gains though, due to some fears about Korean currency and one other but I forget which on that is.
That old Johnny Cash song comes to mind when I think of the dollar, “I feel down, down, down into a burning ring of fire, a ring of fire…” hah
Today’s dollar to Philippine peso rate is 43.090 to 1 USD
The dollar to Philippine peso rate improved today, significantly. Bloomberg indicates it is due to the growing possibility of a debt restructure in Greece.
So off I went to find out why. It will weaken the Euro. Even without a restructure, the European Union will likely have to bail out Greece again. But more members are having issues with this as they bailed it out a year ago, helped the dollar out a lot in the process.
Inflation fears in the UK, bailout issues in the EU will help send investors back to the dollar. With quantitative easing set to end within 6 weeks, things just might improve for the US dollar.
From Time:
http://curiouscapitalist.blogs.time.com/2011/05/11/why-greece%E2%80%99s-debt-crisis-matters-again/
The US has intervened to strengthen the dollar.
How did it do that? Why do you say that? I’ve only seen the US weaken the dollar so they can increase exports
Since we have more than one Tom, if you like, try adding something to your name, You last initial or even Tom X if you don’t want to expose the initial of you last name. You don’t have to do either, its fine. It would help me know which Tom I’m talking too. haha
Drats, with multiple Tom’s there was always a chance you thought you were chatting with a smart Tom !! Now we remove all doubts …sighhhhhhh
US intervened against the yen.
“SAN FRANCISCO (MarketWatch) — The U.S. monetary authorities intervened in the foreign exchange markets to prop up the U.S. dollar against the Japanese yen……”
“(AFP) – 20 hours ago
“NEW YORK — The United States deployed $1.0 billion as part of a G7 intervention in foreign-exchange markets to tame the soaring yen after Japan’s earthquake disaster, the Federal Reserve said Friday.”
I’m thinking the dollar will rally as commodities have declined and the euro is now racing toward the bottom of the tank.
“Sudden weakness in the euro explains a chunk of the dollar’s turnaround.”
“Yen, Dollar Gain Versus Major Counterparts as Equities Fall; Rand Tumbles
“The yen and the dollar advanced against all other most-traded currencies as investors sought safety amid falling stocks and fluctuating commodities.”
Euro Drops to Six-Week Low Versus Dollar Before Ministers Meet on Greece
Updated 3 hours, 7 minutes ago
The euro fell against all but two of its 16 most-traded counterparts, reaching a six-week low against the dollar, on concern Greece may have to restructure its debt and the nation’s problems may spread in the region.”
_____________________________________________________________________
Looks as if investors may be even more afraid of the euro than the dollar. Prolly with good reason.
Yes, the dollar is going up a bit right now because of the Euro troubles but it is based on rumor according to XE. If the rumors don’t come to bear, we’ll likely loose all our small gains.
The reason the dollar to peso rate improved at the time of my story was increased inflation fears in the Philippines. It was because Bangko Sentral ng Pilipinas had increased the inflation rate the day before.
The dollar started to fall again soon after that.
The last time the Euro got into trouble was over Ireland and Greece and it helped a lot. It kept the dollar around P45 for some time.
That’s the about currency, no matter how badly the US might be doing to screw up the value of the dollar, sooner or later someone else will screw up even worse.
I’m beginning to wonder how the Euro will survive. I just don’t see other countries being willing to continue to help badly behaving nations.
A year ago, I thought Germany and France were just huffing and puffing when they threatened to pull out of the Euro. Can they just kick Greece out? I’m guessing each country that joins has safeguards regarding that.
I don’t understand the benefits of having most of Europe under one currency but there must have been some major ones for the countries to give up what seems to me a bit of their sovereignty to do this.
I don’t think the days of trouble are over for the dollar but I think they are near. And thanks to the Euro, it may not get as bad as most of us thought.
I have to do me some thunking on this propping up the dollar against the yen, it would seem logical that if we prop it up against one currency that trickle out to other currencies. I’m not sure though.
I’m going to grab on the free Forex practice accounts around the web as a teaching tool.
Wonder where gold is, last time I looked it had broke the $1500 barrier.
1.00 XAU = 1,494.10 USD Gold
Dollar goes up…gold goes down.
“Can they just kick Greece out?”
I THINK Greece is in violation of enough financial covenants they can be kicked out. Angela is waiting for a report on Greece.
To survive in the EU Greece must reform and renegotiate current loan terms.
I am surprised but there seems to be a willingness on the part of solvent EU members to renegoitae loan terms if Greece will reform. Doubtful Greek citizens will allow enough reform to satisfy Germany and France but that is simply an opinion.
A return to the drachma will see Greek savers lose about 50% of value……silly people….saving in Greece….heheheheeh.
Greece’s credit rating has been kicked down to BB-, the lowest around besides Belarus.
Also 10 year Greek bonds are yielding 15.7% and 2 year bonds 25%+. That 10 year bonds are at twice the rate of one year ago gives a pretty good indication of how Greece is comig along with that little reform dealy. LOL
Oh it is possible for the dollar to peso rate to improve and gold to still up against the dollar. The dollar was up against the peso but gold had topped $1500 The dollar wasn’t getting better yet. They peso was doing poorly. That happened just last week and now I know why……
From Bloomberg
Stocks are being converted to cash in the Philippines.
Wow, things in Forex can change very fast.
The Euro is in trouble and the peso is hitting the brakes so the dollar starts to improve.
Today’s dollar to Philippine peso rate is 43.0999984741 to $1.
I usually try to write a story about the exchange rate once a week, on Sunday or Saturday but I keep posting everything I know in comments. lol
“Oh it is possible for the dollar to peso rate to improve and gold to still up against the dollar.”
Possible…of course.
More than possible, it just happened last week.
Has the dollar reached an ‘inflection point’ ??
Now if only I knew enough to discuss said point……
Yeah, I have to look that one up. But I suspect it has to do with charting or technical analysis which I don’t put much stock in. I like to look at the fundamentals and the fundamentals are. Gold is at record highs, the dollar near record lows, the stock market has been in a bull mode, the Fed is stopping the creation of money, Euro is in debt crises, and the UK is expecting inflation as is Asia. If I had gold, I’d sell off some of it. And I wouldn’t run out and buy a bunch of peso either.
But since, I don’t have mountains of cash piled up to my chin, then I suspect that I might just get to travel a bit more. And the Fed will raise interest rates within 9 months, probably six. The one major problem in the US is the velocity of money is still too low. Meaning growth could be an issue but low growth will keep inflation down. The Fed has position itself so that it can do some major inflation battling if it needs too but the USA needs to raise taxes. That wont happen until after the next round of elections.
Wow! Te dollar to Philippine peso exchange rate took quite a turn over night. 43.4000011521 to one USD. I’m almost getting hopeful. Fatal error. Come on P45 to 1.
1.00 XAU = 1,491.00 USD, Gold is down a bit too. If this keeps up the “profits” (pun intended) of doom will have to write new books.
You know though, I think the USA is going to default on its debt. With that hanging over us,maybe one should buy gold.
Not sure. So long as everyone understands we cannot repay but ‘can’ pay interest we’re still alright. Interest cost is only about 6% of GDP at present.
Obama has a taxpayer receipt app at whitehouse.gov. It is very interesting. You put in your tax bill or your income and it tells you how your money was spent.. It didn’t make me too happy with what I saw. I don’t remember the exact numbers but defense and interest really stuck out. Welfare projects did too.
Right now, the Treasury is dipping into Federal pension funds to pay the government bills. I guess its all really electronic theory transactions but I don’t like it much.