US dollar to Philippine Peso rates have falling to below 41 the last two times I transferred cash from the USA to the Philippines. I am using Xoom and like all other remittance companies their exchange rate is lower than the market rate or what you will get using your ATM Card. However for me, my bank charges heavy fees including a VISA service charge of around 3 to 5 percent. That makes it far cheaper for me to accept the lower exchange rate of a remittance company.
Current US Dollar to Philippine Peso Exchange Rate
I just checked XE.com and the exchange rate is 41.7800 as I type this article. For American expats living in the Philippines, especially those on a budget, times are a little harder than usual. If the expat has an income of $1500 a month this means a loss of spending power of about $250 a month if I use a base rate of P45 to 1 US dollar. That is comparing an US dollar to Philippine peso exchange rate of 48 to 1 to that of41 to 1.
Another way to look at it is. I use to say P1000 was about $20. Now it is about $25 So spending P1000 cost me about $25 more than it did two years ago. Those are rough numbers. I still use those number to do a quick conversion in my head.
In my case, I’ve also seen my utility bills rise over $100 a month. Other cost have gone up too. For two or three years federal payess under various US Federal retirement plans did not get a cost of living increase due to the low rate of inflation in the USA. In the Philippines, inflation was around 4 percent if I recall correctly.
So this is a triple play on the finances of most American expats that live in the Philippines. Oh, I’m doing okay. I can pay the bills but my wonderful island hopping trips have been significantly curtailed. I had hopped to visit Bohol, Manila and Mt. Mayon this year but it is hard to even visit the Jollibee (fast food joint) after the economic triple play. haha
Really the only thing most of us and do to stay calm and enjoy all we have is to laugh off the more difficult financial times. Life is good and I have all I need. For the first part of the year I had a lot more than that. Financial times will get better and then they will get worse again. Hasn’t it been like that for most middle class Americans?
It may get worse before it gets better. I don’t think the dollar has been below 40 for more than a few hours in 20 years or more. Hopefully, it will not happen now either. I think we are going to see more “asset purchasing” by the Fed though. That is the Fed will buy back its own bonds and flood the economy with the dollar in the process.
The Fed has exercised restraint amidst the calls for actions. Many have called on the Fed to take action to help spur the economy. I’m surprised it has not done so but it fears inflation and that is what puts the brakes on that.
This morning I saw a headline that US gasoline prices have spiked. When the Fed buys back its bonds, it increases the supply of the dollar and the value will usually fall. Since almost all oil is traded in dollars, that means the oil barons get less revenue when the value of the dollar falls. To counter that, they raise the price of oil. That would be very bad during an election year for the incumbents. The Fed is independent of politics but a president can and does exert pressure on the Fed. They can exert pressure on each other. It has been too long since my political science classes but I remember learning very well how each of these two powers can do that. I don’t however, remember the mechanics they use.
The Future of US Dollar to Philippine Peso Rate of Exchante
The dollar is doing well against most currencies as is shown in the stronger dollar index. The dollar index measures the value of the dollar against several major currencies. It has been a week since I looked but it has risen over the past few months. That indicates a stronger dollar.
It is the peso that is strong is making the dollar weak. I’m not sure there is a lot to support that movement though. The Philippines has better growth than most of the world which can account for part of that. Its not making a lot of sense to me yet.
If the Fed does enter an asset purchase program, that’s going to put a lot of downward pressure on the dollar and the best I think we can hope for is that the dollar does not fall further. With dollar already at historical lows there is a good chance for that to happen. If not asset purchase, the dollar has a lot of room for upward movement vs the Philippine peso.
I think the Fed is going to try to give the economy a nudge though as the recovery seems to be slowing and consumer confidence is down. When consumer spending also falls, the economy could go into another recession. So it appears likely to me.
What will happen, nobody knows except maybe the Fed and they are not revealing their hand yet. Bernanke, the Fed chairman said “The Fed is ready to act” at a recent congressional hearing. My best interest is not likely to be served when it does. That is okay though, I don’t expect the Fed to act in my best interest. :) Whatever happens, you won’t see me join the course of the “Profits of Doom.” The US dollar to Philippine peso exchange rate will get better, one of these days.
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