The Falling dollar is putting a dent in my fun.   And adding stress to my life.  My income has fallen about 15% over the last year, maybe two years.   Low inflation in the USA meant no cost of living adjustment for me.  Now the dollar is falling from a high of P50 to around P43 to 1 USD.

After living in the Philippines for almost three years, I have learned not too take what the experts say as gospel.  They also said the peso would go to P55 to 1.   That was before TARP.   If TARP had not been passed, I think it might have gone to 75 to 1 as it would be very hard to get dollars at all!  TARP was good for most Americans but it was bad for expats.   The Philippines is experiencing growth in its economy and they seem to be expecting that to continue.  I don’t know about that.  If the US economy dips back into recession, the Philippines economy will suffer too.

finance graphI find it hard to put much faith in economic statistics coming out of the Philippines.  I see official unemployment rates of 7.3% and I know that is totally absurd.   Its more like 70%.  I suppose they do like the USA, and don’t include the millions that gave up on finding work and don’t try any more.

I don’t recall the most recent time when the dollar was at 50 to 1.  It was about a year and a half ago.  I was hoping that wouldn’t see the 40 to 1 number again, any time soon.  The worst thing about the 40 to 1 prediction is the length of time.  That is within the next 12 months.   It seems they don’t see a turn around any time soon.  I’m more concerned about that than I am about the 40 number.   Its not likely to stay there for long but if they are correct, the depressing part of this is that it doesn’t look like the dollar will be going up soon.

To put this in real dollar terms.   If your pension is $1500 a month and the peso falls from 50 to 1 to 43 to 1,  you’ve lost around $225 a a month.  That’s just devestating:

1500 USD x 50 PhP = 75,000 PhP

1500 USD x 43 PhP = 64,500 PhP

Now that’s a drop of 10,500 Peso.   So lets divide that by the middle rate of 45 peso, which is a conservative number since the Peso was around 48 for a long time.    That’s a loss of $233 a month.  For a guy making $1500 a month that’s a staggering hit.  Lets look at some other numbers:

Pension in USD Peso at 50 Peso at 43 Loss of Dollars if Peso at 45
$2000 100,000 86,000 $311
$1500 75,000 64500 $233
$700 35,000 30100 $109

This is what I mean when I say that when you live in the Philippines, your wealth is tied to the exchange rate.   As you can see when there are wide fluctuations in the rate of exchange it can make a large impact on an expats life.  When the dollar was a 50, I was able to go to Bantayan Island if I wanted too.  Now?  I need a vacation from all this work.  I need to sit out on the beach smoking a big fat cigar looking like a fat and rich American.  Fact is, I’m too poor to go right now.  🙂

Christmas is coming, gotta buy toys for the kids.  Jessie needs to go see her family in Tacloban and the electric bill needs to be paid.  I’d hate to have a long term brownout.  I jest but that would really make for a miserable time for me. Living in the Philippines without an air conditioner would loose all its charm for me.

Life in the Philippines is not as lush as the dollar falls.  Now, that doesn’t mean it is a bad choice.  Not as much fun still leaves plenty of room for fun.

Living in the Philippines also helps one to focus on something else.   One can be quite rich in the Philippines without being wealthy but I’m not talking about rich in things.

More up to date articles regarding the peso to dollars rate of exchange can be found at dollar to Philippine peso.

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Filed under: Cost of living in the PhilippinesDollar To Philippine PesoExpat FinancesExpats in the Philippines

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