Dollar to Philippine Peso — Weak Dollar or Strong Peso?

The dollar to Philippine peso exchange rate is quite low right now.  A lot of people have asked me “What is up with the dollar?”  Or “Why is the peso so strong?”

I don’t think it is as much of the matter of a strong peso as it is a weak

dollar.  Though there is speculation that Bangko Sentral ng Philipinas will raise rates, so far they have not.  This speculation caused the value of the peso to rise a bit.  That was back in February.

 

Inflation is up in the Philippines but still reasonable.  A rising inflation rate in the Philippines will decrease its value and improve the dollar to Philippine peso rate.  However, cost in the Philippines will rise and could negate or reverse any gains in the rate of exchange.

Is the Dollar to Philippine Peso Rate Low Because The Peso is Strong?

The reason the peso is strong is because the dollar is weak.  I only word it that way because people are asking the question that way.

To know if the peso is strong, you need to compare it to other forms of legal tender.  That is, the currency of other countries and to that of gold and silver.  If the value of the peso is going up across a wide spectrum of other commodities then the peso would be considered strong.

The Dollar is Weak and That is why the Dollar to Philippine Peso Exchange Rate is so Low

The value of the dollar is falling.  The reason for that is not hard to find.  The supply of money in the USA is up.  It is way up.

The reason for the strong peso is up is because the Federal Reserve Bank (Fed) is creating money.  They are doing this in hopes to stimulate the economy.  The side effect is a weaker dollar.

Other nations are putting pressure on Washington because they believe the Fed is weakening the dollar to increase exports and slow imports.  This policy does have that effect.

It is a drastic measure and it seems to have had a positive effect for those living in the USA.  Those of living in the Philippines are seeing a huge drop in our spending power.

Many want to see this policy stop now.  I want to see the policy stop but I don’t claim to be objective.  I’m loosing thousands of dollars a year now with the rate at this level.

There is discord within the Fed too.  Some believe it is time to stop now.  Others seem to have a plan and are going to stick with it regardless of what happens.  That’s the way it seems to me but the those members of the Fed may have been well aware of this when they started.  I don’t presume to know as much about these matters as they do.

Still, the people are saying prices are up.  That is inflation has kicked in but the official numbers don’t reflect that yet.  I will bet a dollar the next setup of numbers on inflation will reflect that.

The policy of creating money has an end point and we are getting close to it.  It will stop.  The dollar will rise despite some of the ridiculous things I’ve seen on the web.  Some guy is making millions of dollars prophesying the end of the America is near.

The Fed has independence from politicians, once the members are picked they don’t answer to congress or the president.  Of course, both can put immense pressure on the Fed and sometimes do.

I’ll be surprised if there is not congressional hearing in the USA on this soon.  It gives politicians a chance to showboat.  It does put some pressure on the Fed.  I think though it is more psychological pressure by having the public hate them.

When the Fed stops creating money, the value of the dollar will rise again. Unless, something else comes along to hurt the value of the dollar more and send it plummeting even further.  That is always possible!

I’ve provided a chart below showing important rates, including the dollar to Philippine peso rate.  I have created a new page with even more data on it.  You can see that by visiting the dollar to Philippine peso rate as of 4-08-2011.  I will follow that up with like data ever so often so we will have a better idea of what is strong and what is weak.

08 April 2011
US$ 1.00 PhP 43.112
Libyan Dinar 1.00 PhP 33.0355
Repo Rate 6.25%
Reverse Repo Rate 4.25%
Inflation Rate (Mar ’11) 4.3%
91-day T-bill Rate 1.125%
Gold Buying/ troy oz. US$1457.55
Silver Buying US$39.55

I think it will be the end of 2012 before be we see the dollar to Philippine peso rate back around P48 to $1.  I’d like to be wrong though.

As one commenter said not long ago, there isn’t much we can do about the dollar to Philippine peso rate of exchange.


Tagged with:

Filed under: Dollar To Philippine Peso

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