It has been almost two months since the debt ceiling debate and the S and P downgrade of the US credit rating. What has that done to the dollar to Philippine peso currency exchange rate?  Well it is at a six month high.

coin graphThe dollar to peso rate is expected to stay hover around p43.3 to 1 for the rest of the year according to one expert. I’ve learned to largely discount these predictions though. Not long ago another expert predicted 38 to 1 I believe?  Maybe it would have been if not for the Euro debt crises.  The problem with these long range predictions is that conditions change so fast and by so much.

The Inquirer came out with a story this week about the Philippine peso to dollar exchange rate. They announce that the dollar is to remain stable at P43 to $1. It is based on a report released by Singapore based DBS Group. I don’t know anything about them.

Group Predicts Dollar to Philippine Peso Rate To Fall In 2012

The report makes what I consider bold and probably inaccurate predictions.  They went so far as to predict the next interest rate hike by the central bank of the Philippines. They think the central bank of the Philippines will raise the interest rate again in the first quarter of 2012. They can’t possibly accurately determine when that will happen or if it will happen at all.  I don’t think it will happen.

For one, Bangko Sentral ng Pilipinas (BSP) which is the central bank of the Philippines, recently tightened lending by increasing the amount of cash that banks must have on hand. Recently growth estimates for Asia and the Philippines is way down due to the trouble in the Euro Zone.  Japan is in trouble and is a major importer of products from the Philippines. The Yen is very strong though so that makes it easier for Japan to continue hiring people in the Philippines. There are quite a few Japanese owned business in the Philippines that manufacture items such as camera lenses and then import those into Japan.  But they need to export those to the USA.

Americans are not buying consumer goods. American really pulled their buying in August and I think the numbers will be worse in September. I think they will be much worse. I’m seeing a loss in revenue and I think it is because of this. However, I am below microscopic so my revenue is a very poor indicator. I feel though that what is going on in the States is the reason for a drop in my revenue. My website is getting a little more traffic but income is down. I don’t know what is causing it but what I’m seeing coming out of the US economic numbers supports this theory of mine.  It doesn’t however prove the hypothesis correct. I hope the US numbers for September surprise the forecasters in a positive way.  That would be good for me but I fear the numbers will be bad. That will lower consumer confidence even more and American’s will spend even less.

The report from the DBS Group holds that the dollar to peso rate will begin to fall again in the first quarter of 2012. It points out the downgrade by S and P while the Philippines credit rating has improved to notches. Well okay, but what effect did the downgrade have on the dollar? The downgrade caused investors to borrow money from the US Treasury.

When the economics markets are in confusion, investors still turn to the dollar as the number one source for stability. The downgrade actually had a positive effect on the value of the dollar. Now I would have never predicted that. Currency traders are a fickle bunch.

That is why long term predictions on the value of currency are usually inaccurate. I don’t know what will happen to the US economy. It should improve but with confidence in US politicians so  low it may not improve. The world economy is not healthy so the US will likely to continue to have problems with exports. An increase in the value of the dollar will not help that. I think the USA is going to have to look internally to get itself out of this mess.

The economy needs stimulus but with the deficit at near record highs how is it going to do that. In this political climate I don’t think the USA can do a thing. What must change is the politics of power, the politics of “me.” I look for a major wake up call for a group of politicians come the next election and then I think things will begin to change.

The Fed may launch a different type of quantitative easing. A type that will not have such a devastating effect on the value of the dollar.  The method has been used before and it worked. I don’t think it can take any action that has the effect of lowering the value of the dollar as it will be inflationary. Oil prices will balloon for one.

Dollar to Philippine Peso Currency Exchange Upward Trend

The value of the dollar has been generally up for the last few months except right around the debt ceiling deadline when it took a serious nose dive. The dollar to Philippine peso rate actually fell below 40 briefly before the BSP moved in to rescue it. It appears that the dollar to Philippine peso rate is now comfortable above 43 so I look for it to stay there for a while. I also look for the value of the dollar to continue to  improve. I will not be surprised to be totally wrong though. As I keep saying currency trading is fickle and changes happen rapidly. I continue to work hard on increasing my knowledge of forex trading. I even recently bought a course on the subject. Once completed I may even sell the course. I have to see if it is any good first. I don’t sell junk but I bought the resell rights to the course. I have done bought resell rights in the past and then didn’t offer the product as I didn’t think it worthy.

The more I learn about forex trading the more I realize how much I can’t predict the future. One eBook I read pretty much had that as its main theme. That is the best way to predict what currency pair will be trading at is to look and see what it is actually trading at. However it does seem that short term predictions are possible. I don’t yet have the confidence to make them with any certainty.  I can speculate. Hey that is mostly what makes up the so called news these days. Speculation! I get so sick of a highly interesting news story that gets 24 hour coverage as soon it degrades into nothing more than speculation.

I would have speculated doom and gloom for the US dollar a couple of days after the S and P downgrade but I would have been wrong. So I took that as a major dose of learning. When things are uncertain, the dollar is still king and investors flock to it. As a result the dollar to Philippine peso rate has improved in favor of the US dollar.

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