First, the term “FOREX Philippines” refers to the Philippine Peso exchange rate. Or how many pesos you will get when you exchange your dollars or other currency for peso. I know it seems a little odd to word it forex Philippines but that’s the way experts word it so I’m going with that.
With the monetary policy in the United States geared to getting the American economy back on track, things could be worse. The dollar continues to near the P44 level. It has been a little below that lately. As I type this one dollar gives us 43.43 Philippine peso. That downward trend that I feared a few months ago, is still with us. I hope it doesn’t continue downward. Seeing it inch back up to P45 would be very welcome at this point.
Funny though, when the exchange rate for the peso fell to P45 to $1 I wasn’t too happy about that at the time.
What Determines the Philippine Peso Exchange Rate?
Three Factors That Effect The Forex Philippines:
Basically it is that old supply and demand rule that most of us learned about in our economics classes. The supply of money has a major impact on the forex Philippines
And the supply of the Philippie peso is determined just like any other currency. The factors that influence the Philippine peso exchange rate are:
- Demand for goods, services and investments priced in peso.
- If I want to buy Philippine bonds or Philippine outsourcing then I will need pesos to do that. If total expenditures, by non-Filipino, on these items rise, the demand for the Philippine peso will rise.
- Forex Philippines speculators.
- If I believe, for whatever reason, the Philippine peso will rise in value in the future, I will want to buy more Philippine peso today.
- Banko Sentral ng Pilipinas.
- Sometimes the central bank of the Philippines will buy up or sell off a foreign currency to affect the exchange rate.
So why is the Forex Philippines so bleak for American’s right now?
The central bank in the USA has been “printing money.” This increases the supply of money. You know, I like the idea of more money. So why does increasing the supply of money have negative consequences? It causes inflation.
For example, when the economy faltered during the Bush administration Bush used tax rebates to put more money in the hands of Americans. It seemed to have a positive impact. Of course, it also increased the US budget deficit. This kind of thing also causes prices to rise. When prices rises in the USA it negatively effects the dollar with the forex Philippines.
Why does increasing the money supply cause prices to rise? Let’s take a look at a simple way of looking at it. The government sends out dollars to Americans. Most of this money will be spent. So now, you can go to Wal-mart and get that Guitar Hero you have been wanting. The problem is, so can everyone else.
So Wal-mart can’t keep them in stock and they loose sales. To counter that, they will raise prices. They make fewer sales but they have more money and they don’t run out of stock so they can sell more of the item.
At times, the government needs to stimulate spending and the way they can do that is by increasing the supply of money which lowers the forex Philippines for that currency.
Right now, the Fed is printing money by buying back its own bonds. This puts more money into circulation. More money means a power forex Philippines for expats living in the Philippines. It also lowers the benefit of Filipino working in the USA.
So this can’t go on forever. Truthfully, the President doesn’t get the blame nor the credit for such a move. The Federal Reserve Bank of the US was purposely setup to be independent of politicians. They don’t have direct control over the actions of the Fed. Politicians do have influence over the Fed.
The amount spent on TARP and the stimulus package have already the President’s hands tied. The US can’t afford to throw federal spending at the problem because of the large deficit.
The Fed is expected to reverse its trend of creating money by the end of 2011. While I think it is the right move, I sure am not happy what it is doing to me personally. As the forex Philippines is moving in an unfavorable way for Americans. The dollar to Philippine peso currency trading value is likely to remain low for quite some time.
While the Fed is taking measures to increase the money supply to stimulate spending the dollar will likely be weak in the FOREX Philippines.
Filed under: Dollar To Philippine Peso
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