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The Dollar to Philippine Peso Has Declined

Last week, the news around the world about the dollar was great but the dollar to Philippine peso rate declined.  This week, the news around the world about the dollar as been mostly good but mixed. It wasn’t mixed against the Philippine peso.  It was bad news all around.

It got worse on July the 5th when Bank of America forcast strong growth in Asia, especially for Korea and the Philippine peso. The bank sees strong growth in the Philippines and that does seem accurate to me. The Philippines is battling inflation but has it under control. There have been three interest rates increases for the peso this year and there is speculation that another is coming soon.

So far the interest rate increases in the Philippines resulted in an increase in the value of the dollar. Not because of the interest rate increases but instead because of the fear of inflation that sparked the increase. In the long term, increases in interest rates will make the peso stronger.

In the last two weeks, it hasn’t been the decline of the dollar causing it to fall but rather the strength of the peso. The Philippines has been able to buy back some of its short term debt with long term debt.

There are indications that jobs have increased much better than expected in the USA. That’s great news for the economy but it is also sending investors back to the stock market which lowers the value of the dollar.

Also, the budget deficit in the Philippine is falling and causing bond prices to rise.  As a result, investors are eager to buy up Philippine assets.

Now that is what is going on right now. Currency traders seem to be a fickle bunch to me. Most that trade in the stock market expect to hold their stocks for longer periods of time but in currency trading things change much faster. Buying and selling happen much more often.  Currency values are not stable, they change rapidly and the action by large investors multiplies that effect.

It wasn’t that long ago that I had hopes the dollar would rise about 43.5 and then head on up to 44 but those hopes are are no where in sight for now.

Will the Dollar To Philippine Peso Exchange Ever Improve?

While the dollar is showing signs of life, it is still flopping around like a fish out of water with no clear direction. The US is also must increase the debt limit, Republicans say tax increases are of the table and Democrats say they must be part of the package.   The Democrats are right but they also have to stop spending.  This is a bad time for a tax increase though.  Hopefully both will come to their senses and do what is needed with long term legislation to increase taxes and reduce spending. I hate taxes too. I just had to increase my with holding and I will be doing so again soon.

The dollar is not at its worse times ever. This can be seen by looking at the dollar index. The dollar index is a measure of major currencies compared to the dollar:

  • Euro (EUR), 58.6% weight
  • Japanese Yen (JPY) 12.6% weight
  • Pound sterling (GBP), 11.9% weight
  • Canadian dollar (CAD), 9.1% weight
  • Swedish krona (SEK), 4.2% weight and
  • Swiss franc (CHF) 3.6% weight
If the USA defaults and I think it could because of political games and I have wondered for a long time if one party actually wants to slow improvements for its own political gains then the dollar will fall hard.

The lowest the dollar has ever been was in March 2008 when it was at when it was at 70.698.  That was the time when some bank in Europe refused to accept dollars for a short time.  Right now it is at 75.09 so it is quite low. It needs to be low so exports can help to cause some growth in the economy. Internal growth so far has been pitiful. When that changes, you can expect to see the Fed to start taken actions that will also increase the value of the dollar. But it will lag behind the any increase in growth in the USA.

Meaning the dollar is unlikely to get significantly stronger because of its own strength in the near future. What can happen and has happened several times in the last couple of years is that other currencies devaluate. And many thing the Euro will do just that. Bank of America thinks it will fall. This will help the dollar. Not because the dollar is doing well but because other currencies are doing poorly. (Chart: Dollar Index for 2011 from Bloomberg.)

Eventually, growth will subside in China, when it does all of Asia will be affected. Reports are out there indicating that Chinese banks are lending too much. When growth slows, defaults will increase and China could find itself in a situation similar to that of the USA. This isn’t imminent. China is growing to fast, the government of China has ordered banks to increase reserves in order to slow growth and curb inflation. However, one also wonders if it is because they know trouble is coming.  If so, it is a smart move.

The dollar to Philippine peso rate yesterday was at 42.7999 not only falling below P43 but smashing through it. This morning the dollar was up a little for the first time in several days. The dollar has risen only slightly to 42.9199. As I type this, I’m not surprised to see the dollar to Philippine peso is once again back to its downward trend as it at 42.7300.

I’ve learned enough over the last few months that predicting what it will be soon is just not a very smart idea. Though I’m spending more and more time learning about Forex Philippines.  I opened a practice trading account so that I can learn more. I’ll probably be in practice mode for a long time, if not forever!

I hope the slide of the dollar will end by the end of 2011 but I won’t predict it. No prediction makes sense to me at this point.  The Bank of America said it is making the assumption that reason will prevail in Washington regarding the debt ceiling. We are three weeks away from when the Treasury Dept says that must happen and both sides seems deadlocked at the moment.

So the dollar to Philippine peso rate just can’t be seen in a favorable light for the American expat.  It is the expat that is hurt the most by a decline in the value of the dollar.

How Americans Living Abroad Can Vote

How many of us vote? It isn’t that easy to do for expats. I went to the Federal site for overseas voters last night. The first thing I have to do is to pick a state. I don’t really have a state any more.  It seems that I have to use my last residence in the USA which is Tennessee. The last ballot I got came so late. Too late for me to vote. Still, I will keep trying.  Some states allow you to fax in your ballot or they will at least fax it to you. Tennessee will not.  We need to increase our voice as much as possible. It will still be insignificant but it will help some. The site to help you get our state ballot and even register can be found here.

Your vote matters and it will help ever so slightly to cause politicians to consider us. We need a Political Action Committee to represent us.  Has some enterprising American expat already started that process or created one? So many of us include American politics as part of the reason to escape. I’m not one of those but many do. Perhaps we should reconsider our positions on that. I was tempted to keep this idea to myself and do it myself.  If we can’t beat the lobbyist, perhaps we should join them!

I do think by bonding together we could influence the dollar to Philippine peso exchange rate

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