Too many big words lately — Recession, Inflation, Stagflation, Devaluation, and all the other “-ion” words you can think of (let’s ask Sen. Miriam.. hehehe). But one thing is definite, people are hurting in this global downturn.
In the US, they have to contend with rising mortgages, oil price hike, rising cost of basic commodities, credit crunch, unemployment — it’s a picture of a perfect storm. Over-all the Dollar is weaker compared to most major currencies.
Here in the Philippines, though we have our share of those economic turmoil, Inflation being the biggest of them all, makes you wonder why the greenback keeps on edging over our local currency, the Peso. It’s simple – if the Dollar is weak, our Peso is even weaker. India and Philippines have the worst performing currencies for the first half of this year. As a third-world country very dependent on OIL, we can only squirm as the world’s oil market keeps on increasing its prices almost everyday. And when oil prices rise – everything else follows. Are you feeling the crunch?
To date, Dollar-Peso Exchange Rate is now at $1=Php45.50. Will it continue to rise? In my opinion – YES. So long as the OIL Prices continue to increase, then it’s inevitable for our currency to further retreat. Though, the Central Bank has expressed their concern, and will do everything to control the exchange rate at a Php45 level, even if it takes flooding the market with dollars (since the government made their fiscal budget pegging the dollar at Php42-45), but in a free market, anything can happen. As people are desperate to find tools where they can earn – we can even anticipate a bubble coming up. My fearless bet — $1=Php52.00, only then I’ll start unloading some of my Dollar deposits. For now, I’ll watch and observe.
Also, we have to consider the power our OFWs. The moment they start sending their hard-earned dollars to the Philippines – by virtue of supply and demand, the Peso can gain some ground (every Enrolment Season and Christmas Season).
But, there will always be two sides of a coin. If some people despair, others rejoice. And who are these people? — Those people who earn Dollars for a living — OFWs, Expats, Exporters, and BPO Companies. Since the start of the year, the Peso lost almost 8% to the Greenback. That’s added 8% to their Profits and Purchasing Power.
