I have read over and over how the Philippine Peso always rises in December.

It didn’t rise significantly over the dollar in the last two years.  In the last five years it rose three years, fell one year and pretty much stayed unchanged in December of 2010.

In 2007 the dollar fell hard against the peso.  Not a surprise to me since I have rotten luck and that was just before I arrived. 🙂

I wrote an article at the end of November when the dollar was around P44 to 1USD and it closed the

USD

The US dollar held steady in December of 2010

year in the same range.

There are so many factors that affect the value of the dollar.   Yes, there is an influx of foreign currency in December but there is every month.  It would seem reasonable to assume that more money is sent from abroad during the holidays.

The amount of remittances into the country is released by the government but I’ve found the information to be less than easy to find.  Perhaps someone knows where that information can be found.  Historical data would be awesome.  It would be nice to have the amount of remittance date for each month.  I found one site but they want $200 a month so I think I’ll have to pass. 🙂

About 10 percent of the Philippines economy is based on foreign remittances into the country.  Many Filipino work overseas.  Many more dream of doing that.  Quite a few Filipino find themselves in bad situations because of it.  Young women are most often exploited but recently several men from Cebu where promised boxing opportunities in Australia only to work in slave like conditions as “house boys.”

Remittances are not the only thing that affect the exchange rate though.  Exports, investment, inflation, growth of the economy of both countries and many more things determine the value of the peso in relation to the dollar.

This year, the decline of the Euro helped increase the demand for the dollar.  Interest rates on home mortgages in the USA were up at the end of the year.  So there were fewer loans applications.  Fewer dollars being spent would decrease the supply of money in the USA and push up prices.  However, that doesn’t mean that fewer dollars were loaned in December.  Loans in the pipeline would play a more direct role in that metric.  I don’t know what those numbers are.

The point is, it is an extremely complicated beast.  Looking at only one factor is probably not a good way to predict the rate of exchange nor is it going to mean a lower dollar in the Philippines at year end.

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