Drastic Fall For Dollar to Philippine Peso
The dollar to Philippine peso is currently under massive assault. Why? Because the US economy is doing better than expected. The economy in the USA expanded by 2.5% in the third quarter. I sure didn’t see that coming and I don’t think many others did either. The dollar to Philippine peso has abruptly fallen below 43 all the way down to 42.6. The Euro Zone has gotten its act together and Euro stocks are soaring as is are US Stocks. US stocks are on track to have the best month since 1974. The dollar fell against all major currencies and caved against the dollar to Philippine peso. Yeah for the USA?
Well yea, I’m not selfish enough to wish ill will on the USA economy just so that I have few hundred peso or even 10,000 more pesos. I wont send the extra cash back when the dollar is strong but I just cannot gloat over a faltering US economy driving up the value of the dollar.
I’ve written many times about this and now we see it in action. When US stocks are doing well, the dollar generally falls in value. My understanding which I admit isn’t at the expert level is this. When stocks are soaring, investors pull cash out of liquid assets like T-bills and cash. Instead they put them in more risky assets like stocks. Where there is more risk one generally expects higher profits. Stocks are more risky because a company could fail. Regardless of what the S and P and the “profits of doom” tell you, the USA is not going to fail.
This chart shows from XE shows the rapid fall of the dollar at the same time the US stock market soared:
This is the short term effect, I think in the long run a strong US economy helps set a strong US dollar but I’m uncertain of that. It makes sense but not all things in the investment world make sense unless you dig. I remember the first time my finance professor explained how one could make money on the value of falling stock. I’m not going to go into the details but it is called short selling the stock.
Now with the value of the dollar falling the return to an increase in inflation will return. This is mostly due to the possibility that oil prices will rise. Oil prices will likely rise because most oil is sold in US dollars. That means oil produces in the Middle East will see a decline in revenues and to offset they are likely to raise oil prices. This holds true for many other commodities as well.
Currency Trading For the Dollar to Philippine Peso May Be Very Interesting
It has only been a few days so it is impossible to predict next week. Those traders that like to use charts and graphs to predict future stock prices are saying the US stock market has reached a “break out point.” In theory that means this trend is likely to continue. This is called technical analysis and I don’t put much stock in it. It might be useful in the short term but for long term movements the better way to evaluate expectations is to look at fundamentals of why a stock should rise and fall. The companies management, market outlook, balance sheet and income statements are a far better measure in my opinion. Historically, the stock market leads the US economy by nine months. So if the stock market goes up over the years the economy improves about nine months later on average. Its election isn’t it?
It is going to be interesting to watch. It will be a set back for the dollar to Philippine peso currency trading but I am not so sure this will be a long term trend. I don’t think it will be. However, my predictions have not been spot on. As one author wrote, the best indicator of what a currency pairs value may be, the best indication is what it is right now. I look for volatility in the dollar to Philippine peso exchange rate over the coming week, I just hope it is upward volatility.
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Still I retain faith in US and European politicians to continue destruction of their respective economies.
It isn’t the politicians. It is the people that keep sending them back.
Only 90% plus are reelected.
Only?
What difference does that make in any case? People keep voting for people telling them what they want to hear.
Actually, we are in the final stages of our Representative Democracy.We-the-people have discovered the politicians will give us more than we pay in to stay in power.
Once again, Greece gives the dollar a boost. It is still up and down and right now below 43 in the dollar to Philippine peso in the currency trading but it will likely be on the rise again as stocks have taken massive losses.
The Greek prime minister intends to put the latest bailout package up for a vote by the Greek people who are opposed to it by 60%. That is just crazy, Greece has no choice if they wish to stay in the Euro. I suspect leaders in the Euro are going to soon wash their hands of Greece if they can’t force them to take measures to resolve the problem. Either way, we should have a few more months of Greece supporting the dollar.
Rusty,
That was yesterday’s news. The dollar is currently losing value because of optimism in the Greek bail out deal. Plus, the Fed has a news conference this afternoon with hope of Brother Ben announing plans for QE3.
The dollar will go back up if the Euro crashes again. It may take a little time but it will go up because when the stock markets are in trouble people put their money in the USD. I don’t believe the dollar is going down because of trouble in the euro. The stock market in the USA will but that pushes the value of the dollar up, in general.
But it was yesterday when I wrote it, or it will be in 45 minutes.
Rusty,
The Commodity traders are pushing for a weaker dollar. A weaker dollar increases their profits and pushes the cost of oil higher. I know many people are feeling scammed by the financial markets. The cost of a barrel of oil was $82.66 at the end of September 2010. My organization was paying $2.59 for a gallon of diesel fuel. The cost of a barrel of oil was $82.59 at the end of September 2011. My organization was paying $3.24 for a gallon of diesel fuel.
The international commodity traders don’t push the dollar down. Commodity prices rise because the dollar is falling, especially if the commodity is foreign. Exporters in the USA want a weaker dollar so they can increase sales overseas. Exporters in the Philippines want the same thing. At the same time on of the phone companies in the Philippines is complaining about a weak dollar as it caused their revenues to decrease as much of their sales are in USD. Commodity dealers can’t really affect the value of the dollar, the market is too big but they can whine about it depending on their particular position.
Oil trades in dollars in most cases, even in Saudi Arabia. When the value of the dollar falls their revenues fall. So they will raise the price to keep their revenues up. This is one of the reasons quantitative easing could be inflationary and is the Fed chairman’s biggest worry. Pushing the price of the dollar down causes commodities to rise.
In the last few days, the dollar has been rising against the Philippine peso and though I’ve not yet checked, I’m sure if stocks continue to fall more money is being put into T-bills and cash and that will send the value of the dollar back up as demand is higher. Of course, there are many other variables that play into this such as when in Oct the president of the Philippines came out with a spending plan in the Philippines, that pushed the value of the peso up against the dollar even though the dollar was doing well world wide. That seems to have mostly subsided.
1.00 USD = 42.7700 PH
I just checked the Euro, GB pound, Swiss, Australasian dollar and the Japanese yen and the Philippine peso.
The dollar is up, not down against all these currencies except the yen. The yen to dollar is trading mostly flat.
There dollar rose significantly today against most of the currencies above, all except the yen. It saw its best performance against the pound.
If you click the XE link in the article and chart it over a week, you’ll see what I see. Of course, tomorrow can change it completely. it could change before the day in the West is out. I noted some decrease in the value of the dollar at the end of the chart but the dollar is still up.
There are some strong indications now that the Greek prime minister’s government is about to fail and his days are numbered. If they are the idea of the referendum to approve the debt deal offered to Greece. If it goes the people, they are likely to reject it and Greece will be in bigger trouble. Many members of his coalition are very unhappy with the idea of this referendum so I think he will be out by the end of the week. So the deal could be back on and I suspect that this is why the dollar has slide a little in the last few hours.
I really don’t look to who the dollar is doing day to day, I’ve learned that currency trading is too volatile. What I’m mostly interested in is the general trend for the dollar. I see that as very slowly an upward trend at this point. Now I wouldn’t go out and invest in the dollar based on that, but it is what I see. I didn’t check gold prices. My guess is that gold is up with so much uncertainty in the market.
Rusty,
I am watching a very intertesting documentary titled “Inside Job”. It would be interesting to get your reaction on the movie.
You are being to kind to the Commodity Traders. I understand everthing you are saying but I think it is getting much more complicated. I am watching the trading of oil daily. Europe is doing their own quantitative easing with their banks. The dollar should be getting stronger. Oil prices should be dropping also.
No, oil prices should be rising when the dollar is falling. The Euro price doesn’t affect oil prices because oil is traded in dollars not Euros. Sure some oil trades in Euros but it is minuscule compared to the dollar.
The dollar is rising against the Euro for the last six months or so. I’d have to go back and look but the trend has been upward.
I’m not being kind to commodity dealers. If I was getting fewer revenues because of the falling dollar, I’d raise prices or sell something else. Their profits all falling. They are doing what they should be doing.
Is there insider trading, yell yes, there is.
Rusty,
I am reading comments on a Yahoo Finance article. I plan on checking this out to see if this statement is true. The Oil Commodity market is having wild flucations of over 20% (up and down) in short periods of time.
Quote:
“They’re shorting the euro, so the dollar goes up and oil goes down. When congress passed the commodities modernization act of 2000 they enabled speculators in the oil market. That meant that banks and hedge funds were able to speculate and trade oil. Banks and hedge funds have been playing the market in two ways. (1) They have hired an army of traders whose only job is to pump up the price of oil. (2) Then they have hired an army of forex traders to drive down the US dollar.”
Again, I don’t know if I fully believe the statement. I hope you get the chance to watch “Inside Job”. It talks about the events leading up to the 2008 financial market collapse.
The dollar to Philippine peso is back over $43 to 1.
USD United States Dollars 43.1199989319 as of yesterday’s close.
The dollar headed back down yesterday. Not a surprise… Like a yo yo.
USD United States Dollars 42.7400016785
The dollar to Philippine peso currency trading is back over 43:
USD United States Dollars
43.2999992371
The Euro Zone remains in trouble, some are expecting a recession in Europe for the last quarter of 2011 or early 2012. As a result, many investors continue to put their money in dollars.
The dollar is up again at 43.3499984741 to 1 Philippine peso.
if the super committee cannot come to agreement, I look for another downgrade by S&P and this time Moody’s may follow. If that happens the dollar will first fall then rise again as investors become even more concerned about the future of stocks. The USD will not fail.
Prolly right about the downgrade.
The congress refuses to do its job and appoints a so-called super committee drawn from the same congress. Appointing the super committee I understand…….continue doing nothing while giving the appearance of doing something. Seventy-eight percent of the American people do not believe the supper committee will succeed. (CNN poll)
Some parts of the US .gov do continue to function. We continue to supply foreign aid to China for example !! (I wish I was kidding.)
Greece is off the front pages only because Italy has taken over. Mario Monti is the new Italian ‘leader’.
Let us have a quick look at Super Mario:
Chairman of the Trilateral Commission
Leading member of the Bilderberg Group.[10]
International adviser to Goldman Sachs
Just fractures me. Super is there to direct where the money falls as the Italian economy collapses. (Interest on Italian sovereign debt hoovers around seven percent….NOT sustainable.) Untold billions will be made during the collapse.
Three Italian leaders track back to Goldman Sachs. Government Sachs anyone ??
Since there reasoning for the downgrade was the political environment and not the value of the dollar, I would say failure to reach an agreement would further that idea.
The amount of cuts will go into effect anyway. Dems must cut social spending and republicans must raise revenue.
If the American people don’t correct the problem in 2012 then I hope someone will make a convincing argument for term limits. If the American people keep voting their senators in so they will become more powerful until they die then term limits are in order. Doubt it will happen but that is what is needed. If the people won’t limit the bad behavior term limits would help for a while. Then someone would figure how to exploit that. Knowing they have to leave after three terms would make them more controllable by lobbyist willing to offer them jobs.