What is the Dollar To Philippine Peso Rate of Exchange 04-15-11?

The dollar to the Philippine peso is virtually unchanged since last week.  Last week the official dollar to Philippine peso rate of exchange was  about P43.1 to 1USD and this week it is  at 43.2.  The rate for financial markets is at 43.2 as well. Things could be worse.  The price for gold has also remained almost flat.

I had planned to write on this topic weekly but that may be too often unless it is an eventful week.

It wasn’t long ago the dollar to Philippine peso rate was above 48 and it stayed in that range for a while.

Now dollar to Philippine peso rate is at 43 to 1.  So how much does that hurt the average expat living in the Philippines.

Let’s say, the expat has a pension of $1500 USD per month.  When the rate was 48 he converted his dollars into Philippine peso and recieved 72,000PHP.

Now when he converts his dollars into Philippine peso he gets Php64,500.  That is a drop of 10.41 percent in spending power.

If one assumes a standard rate of P45 to 1USD to convert the difference in dollars the cost is $166.67 dollars.  That’s a pretty hefty toll on most retired persons budgets.

The situation gets worse though.  When you consider the inflation rates in the USA vs the Philippines.  In the USA inflation rates have been under 2 percent.  That means no cost of living adjustment for the Federal pensioner.  In the Philippines, the inflation rate was closer to 4 percent and as you can see in the graphic it is currently above 4 percent.

Cost Of Living In The Philippines Closely Tied To Dollar to Philippine Peso Exchange Rate

So right now, with the American economy slowly coming out of the recession, I find myself hoping for a little American inflation.  I’ll be happy if it is just above 2 percent. ha-ha  Yes, I’m being a bit selfish but a low rate of inflation isn’t such a bad thing.  If you have debt, it makes it a little easier to pay back that debt.  It lets you recover a little of the interest that the bank charges you.  If the inflation rate exceeds the interest rate, then you are actually beating your lender.  Hopefully things wont get that bad again or you’ll be too broke to pay back your loans.

Though technically, your cost of living in the Philippines doesn’t go up because the exchange rate between the dollar to the Philippine peso falls, you just have less money.  In fact, this helps to curb inflation a bit.  There are less pesos floating around because you and all the other American expats living in the Philippines are getting fewer pesos to spend.

So if you think about that, it is another reason for the Philippine government not to over value its peso.  This is true of any country.  Sometimes countries do manipulate their currency.  When they do, there is a price to pay. That good old “invisible hand” we all learned about in high school and were taught it was the foundation of a capitalist economy kicks in and smacks the manipulator “upside his ugly head.”

And I fear, Uncle Sam is about to take a horrible beating at the mercy of that “Invisible hand.”  Inflation will kick in and force Uncle Sam to stop creating cash.  This will aid the dollar’s recovery over time.

More articles about the dollar to Philippine peso can be found here.

Of course, if the US defaults on its debt due to the bickering politicians, then I have no idea what will happen.  Would that bring financial Armageddon as some doomsday prophets have been suggesting?  I don’t think so but it sure wont happen matter regarding the dollar to Philippine peso exchange rate.

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