Philippine Forex — Will the Dollar Stay Strong?

If you are expecting an answer to the question posed in the title, you may be slightly disappointed.  I know quite a bit about living here in the Philippines, but as far as being a currency guru … not likley to ever happen.

But even though I am no expert and am not currently a currency trader in the sense of trading for trading’s sake, I certainly am involved in foreign exchange … FOREX … on a daily basis.  If you chose to live outside the US you will be too, in the Philippines or any other country that doesn’t use the US dollar as its offical currency.

Here’s a very interesting current analysis sent in to me by Paul … thanks Paul … that has some good explanations and common-sense thoughts.

NEW YORK (Reuters) – Naysayers who predicted the U.S. dollar’s demise as the world reserve currency of choice have been silent of late given the greenback’s meteoric recovery in recent months.

Slammed over the last several years as U.S. government budget and trade deficits mounted, the greenback was seen ceding its status as the predominant currency to the euro.

Talk of nations reducing their dollar reserves in favor of the euro prompted talk the dollar would also lose favor as the medium of exchange for commodities.

However, the global financial crisis that has rocked markets worldwide has seen investors voting with their cash and buying U.S. dollars, indicating that reports of the greenback’s death as a reserve currency have been greatly exaggerated. … read moer about the value of the US dollar in foreign exchange.



Two things I think are not as well explained by most of us in the small community of bloggers who actually live in and write about the Philippines.

First of all, once you actually live here, you start to think in Pesos and most of what seems so complicated from the outside becomes a lot simpler.  Of course my wife and I check the Peso per Dollar rate an average of several times a day, but normally only in terms of curiousity about some news article or background planning for some future project or investment.  After all, it is what ir is, and even though there has been sigbificant change from when we first moved here .. about 56 to the dollar down to about 40 to the dollar and now back up to the 49-ish range, what we buy in the grocery store makes more overall difference in money left over at the end of the month … or month left over at the en dof the money (less fun) … than whatever gymnastics the rate has performed over that month.

Secondly, there are ways to mitigate rate changes in some ways for those who have a head for figures and want to diversify their holdings.  If you read very many of my articles you know I am a big advocate of diversifying your income streams.  Even if you have a comnventional job, don’t let that be your sole source of income.  It can vanish tomorrow, you will someday have to give it up in retirement anyway, and what’s the point of leaving money on the table today.  By far the best way, in my view, for a person to empower thier income … regular or retirement … is to earn money online.  One of the hidden advanatages of earning money online is that many of the sources you can earn from allow you to be paid in currencies other than the US dollar.

A friend, fo example, has moved several of his ventures into Euros.  Is this a good deal?  Well there’s no way to predict the future from past performance of currency, but let’s just make a rapid “guesstimate” example.

Suppose, for ease in calculating, you were making a steady $100 USD-worth of profit per month.  I’m just going to use an average exchange rate over the past 12 months, which of course is far from accurate but I don’t want to build an analyssis spreadsheet here.  Most of us live pretty average anyway, yes?

  • Just leave everything in US dollars: Income: $12,000 USD  On hand today: $12,000 PhP if converted today: ~ PhP 586,000
  • Take the money in Euros and Hold them:  A little over E 700 per month, today about E 860 and if convereted today ~ PhP 551,000
  • Convert the USD to PhP as earned … again an average .. he’d have about PhP 540,00 in his Peso account today.

This is of course an oversimplification and a genealization … and. in general, all generalizations are wrong ;-), but on average over the last year, Philippine pesos-wise (which is, of course, what we spend to live here, our mythical mogual would have been 45,000 Pesos richer … almost a month’s income … by keeping his business in good old US Dollars.

As they say, on the Internet, or especially living here in the Philippines, YMMV.


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Comments

  1. Neal in RI says

    Off Topic
    I tried to send you a Question via the contact but everytime I punch in the security code thing it still wont go thru.

    Q: What do you do to occupy your day there, Im sure your website takes some time but what else, Small lots so no yard work, No Gardens, No Livestock,No Swimming Pool. Do you Fish, Run a SariSari store just for pastime, Im sure you don’t just Estandby and swill Beer? Im tryng to get a feel for everyday life there.

    Thanks, Neal

  2. says

    @Neal in RI: Hmm haven’t had aproblem with the page, neal but sounds like one has now developed. I shall go and check it out right away, thanks for letting me know and sorry it gave you a hassle.

    Neal, your question is an _excellent_ one. It would take me a couple days just to list everything I do. Much as i hate ‘real’ jobs there are times I think i need one just so I had a place with regular hours ro escape to.

    I will make that a questions pst for this coming Thursday. the short answer is, I work about 6 hours a day at various online ventures/mis-adventures, s[pend an hour or two here at the blog, try to vist with my 3 and 4 year old nephews, try to walk fopr exercise, go shopping, take the car to the car wash,pay blls, sweep the street, watch ESPN, Discovery, Nat Geo and Fox Crime … and on and on it goes.

  3. says

    Dave ~ Nice to hear some good news about the US dollar. I predict it will stay strong well into the future.

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