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The Dollar to Philippine Peso Breaches P44

The dollar to Philippine peso currency exchange rate has now hit its highest level in eight months. While we largely have Greece to thank for that, that is not the only reason. It is likely the primary reason. The end of printing more money in the USA also plays a huge factor in that. And surprisingly, I think we can thanks the downgrade of the USA credit rating.

Rosy Dollar to Philippine Peso TrendThe long term effects though may not be as rosy for the dollar though.  I’m not certain. It would make sense that eventually the fear in the markets could be realized in the economy of the USA. The USA is not in a position for another recession. The troubles with the Euro could depress exports of goods and services into Europe. That is not a good thing for the USA.

I think the USA must look for internal growth rather than external growth as it seems to be trying to achieve. A good idea when people in the USA are out of work. So we need people back to work in the USA.

Banks don’t want to lend when the future economy looks bleak. The bad debts they incur could damage them severely. The USA also doesn’t need another banking crises either.

What is the way out of it? Probably government spending but the deficit is at record highs already. This deficit is caused by increased spending without funding. It is caused by the increase in prescription benefits and two wars without actually paying for any of it and the Bush tax cuts. Those that wish to remain in denial over this fact can do so. That is what it is, it is denial. The economy needed the stimulus of the Bush tax cuts but they came at a time when we had increased spending.  The benefits of a tax cut are short lived. Bolder action might have been better.  No, not raising taxes. You don’t raise taxes during a an economic downturn. We had no choice regarding one of our wars. The other was ill concieved and sold to Americans on a bunch of lies.

I remember someone trying to pin me down on the subject of the Iraq War back just before we invaded. The best answer I could give them was if what the Bush administration was telling us was true then we had no choice. That was the problem, it wasn’t true. Lies were also used to sell Gulf War I so I was skeptical. As it turned out, my reluctance to commit was with merit. It wasn’t true, Iraq was not on the verge of building the bomb and there were no weapons of mass destruction.

Iran was involved in the 9/11/2001 attack, Iraq was not. I still leave open the possibility that part of why we went into Iran was to increase our strength in the region. With troops in Iran and Afghanistan we also had Iran in the bulls eye.  I still think that might be part of the plan. If so, no one has unofficially leaked that to us yet. Though some analyst have suggested it.

That’s where the deficit comes from, the was and increased prescription drugs. But even that would have not resulted in a deficit if not for the Bush tax cut. The GAO has made that issue clear. Obama said three years ago we were out of money for more government spending. I don’t see that has changed. With the slow economy tax revenues should be down too.

I haven’t seen numbers coming out for September yet regarding consumer spending and confidence but my guess is they are going to be horrible. I think October will see some improvement and with any luck at all, people will go into a spending frenzy during the holidays. Many of us laughed when Bush told us to go shopping but the truth was, that simple answer was exactly correct.

America needs more jobs and how does one get that? When production is at capacity then businesses must spend to increase the ability to produce more. When plants lay idle because there are no sales, then employment numbers will be bad, tax revenues will fall. That is the perfect recipe for government stimulus but the country is in no mood for that and the country probably can’t afford it. Honestly, I’m not 100 percent sold on that.

The improving value of the dollar could help reduce the cost of energy in the USA. Actually it should if other things remain equal. That would be a huge burden off many Americans. That should increase consumer confidence and that will increase spending. An increase in spending should increase the outlook banks have. That will make them more likely to loan to allow business to expand. So lets all wish for a very merry commercial Christmas in the USA. First, we must give businesses a reason to expand.

The dollar to Philippine peso has flirted with the P44 mark several days now and has been on the verge of crossing it. I think back to a very bleak time for the USD and I wondered how it would turn around. Though, I knew it would recover, how it was going to happen was beyond my grasp. It looked like the dollar would follow the dire predictions of following below p40 and staying there for a while.  One major bank predicted P38 and many quoted it as a certainty. I probably would have too if I had not seen these kind of predictions in the past, at both the higher and upper end.

Unexpected events can diagrammatically effect the value of a countries currency trading value. There are those every day looking for a way to hurt the USA again. Economic pain is the way to hurt the USA and terrorist learned that with the attack on 9/11/2001. I can’t even predict how the economy would react to such an attack. A lot of the troubles in the USA now can be traced back to that event. It had major impact on the banking crises though it took six or more years to materialize.

Government spending didn’t do it, but it did make it harder for the USA to spend itself out of the crises once it hit.

This week the dollar to Philippine Peso did finally breach P44 to 1 USD but closed at 43.975 as of Oct. 3rd. According to Business Week, the monetary policy moves the BSP is considering should also help to strengthen the dollar. On the following day it closed above P44.

For Americans living in the Philippines, that assessment by Business Week could be rosy indeed. I know that exporters in the Philippines are hurting and asking for the Bangko Sentral ng Pilipinas (BSP) to strengthen the value of the dollar. A group was calling for stability but they don’t want stability, they want a strong dollar. Stable could be P41 and they wouldn’t be happy with a stable P41. However, the BSP correctly says there is only so much they can do. It went on to say it cannot stop the fall of the dollar and it is correct. It can though mitigate it.

Dollar to Philippine Peso Trend

For the last six months, the value of the dollar to Philippine peso currency trading has been positive for the dollar with a few exceptions along the way. Sometimes those excepts have been dramatic. Dramatic changes in currency trading are to be expected but the trend for the dollar to Philippine peso appears to now be upward to me.

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