Forex Philippines and The US Debt Ceiling

In the last couple of days, Forex Philippines has strongly favored the dollar.

So what will happen with the dollar to Philippine peso currency trading now that congress did manage to raise the debt ceiling? I wish I knew the answer. I don’t think a lot will change. I do think without a debt ceiling increase the dollar would have fallen dramatically.

Forex Philippines and The US Dollar
Feeling Like A Million Dollars but For How Long?

Passing of the bill to raise the debt ceiling doesn’t seem to have much impact for a couple of reasons. The main reason is that investors believe the US would raise the debt ceiling. Immediately after passage of the bill, the dollar to Philippine peso rate fell significantly. Today, the dollar to Philippine peso rate of exchange is up significantly.

The peso fell for the last two days because of the growing fears that the US is headed into a second recession. A recession that will likely hurt “emerging nation assets.” At least that is the assessment of Bloomberg. I looked for a definition of what that term means exactly. I didn’t find it. Currency is an assent, factories are an asset, many things are assets. A recession in the USA will always mean fewer imports into the USA and that is the first thing that comes to mind.

US consumer spending fell in June for the first time since Sept. 2009. That may be very significant, if the same holds true for July one could soon expect US economic growth to fall even more.  The US economy seems destined for continued problems.

Despite the debt ceiling increase, the US is just not in a position for more huge spending programs.  This could leave little room for anything other than more quantitative easing or the creation of money by the US Federal Reserve Bank which in the short term, only hurts expats. And lets face it, we expats don’t hold much political influence. In the long term, creating of money has a long history of causing inflation if there is no corresponding increase in growth. When there is growth, creating money doesn’t usually result in inflationary pressures.  That is not the situation we have.

In the short term, creation of money may help slow a recession.  It is hard to know if the Fed prior qualitative easing helped at all.  It doesn’t look like it but I tend to think it did.  It didn’t help me in the least.  It hurt me.  It hurt expats all over the world.  It lowered the value of the dollar. That however also surely helped exports.

If Americans will not spend, then who will?  Well, that would be countries with growth.  Countries like China. Aww that’s the boogie man again.

Forex Philippines Long Term

I don’t see this downturn in the value of the peso to last long. I suspect the news for Forex Philippines to be positive again soon.  There will be adjustments in the stock market in the Philippines and there has been.  When stock prices fall, currency prices usually rise.

A US recession would be good for expats living on a pension. Don’t like the sound of that?  Honestly, I don’t either. I just can’t force myself to be that selfish.

Why is it good for expats living on a fixed income? Because a recession normally means fewer dollars in circulation. That is why I thought with the first recession expats would enjoy an increase in the dollar to Philippine peso forex. We did but it didn’t go as high as the expert thought and I missed the mark by an even larger amount.

The US Recovery Act and quantitative easing change the ball game. However the desired effects were minimized because the banks in the USA refused to increase loans. It seems we need to find another way to stimulate banks to make loans. How could we do that?  Well, this may just take time.

Perhaps it is time to let the invisible hands do the work without government intervention. This will be very painful for most Americans. It would likely be outstanding for me. I don’t think the American people, including the Tea Party are really ready for that. They may think they are but I highly doubt it.

I thought the Reagan tax cuts in the 80’s were a wonderful thing. They did help cause a boom. There is no doubt about it. I remember the democrats at the time telling me how crazy it was. That yes, it would work but it would result in what we have right now. However, I also found them to be surprised when I showed them that middle class American’s did benefit from those cuts. Wasn’t hard, all I had to do was pick up a tax rate schedule and show them how much less in taxes they were paying. Taxes were just too freaking high in those days.

Maybe I’m back to my original opinion, government is just evil. Undoubtedly, we must have it.  While I can imagine no wars and no government and no religion too, I just can’t imagine it on earth. I can’t imagine no heaven because that is the only place we can achieve those things.  I love the song though and the message behind it.

We are not close to the end. My hopes for an improvement in the dollar to Philippine peso rate of exchange by the end of 2011 are poof! Not going to happen. At least not for the reason I had hoped. That is an improving US economy.  It is funny how both a good economy and a poor economy can increase the rate of the dollar.

How does a failing economy increase the value of a currency? By taking dollars out of circulation.  By lowering the supply of money. Until the banks are ready to support growth by making loans, the US will not come out of this downturn.

The deficit deal has left investors feeling and rightfully so that nothing has been accomplished. The fundamental problems are still there.

Oh and yes, I was wrong. Congress did manage to pass a bill to raise the debt ceiling. I’m glad. As bad as the deal was for everyone it is clearly better than a default. Who won the debate isn’t as clear as people think it is.  I had planned to write more on that but this article ended up taking a different direction.  I’ll likely write about that on another of my blogs, one more open to political discussion. One where I welcome it.  You know, it is easy to be right if you don’t take bold positions.

I wouldn’t get my hopes up over what has happened with the Forex Philippines over the last couple of day, it wont be lasting.

Tagged with:

Filed under: Dollar To Philippine Peso

Like this post? Subscribe to my RSS feed and get loads more!