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Import Collapse Turns Into a Boon for Philippines’ Currency


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softail

One consequence of the Philippines’ struggling economy is turning into a boon for its currency.

A collapse in imports has had a positive effect on the nation’s trade deficit, leading to lower demand for overseas currencies and helping to strengthen the peso. The Philippine currency is the best performer in Asia this year, up more than 2% against the dollar.

“With Philippine growth likely to be hamstrung by enforced and voluntary social distancing, imports will remain weak,” said Eugenia Fabon Victorino, head of Asia strategy at SEB AB in Singapore. “This will cap the trade deficit, allowing the peso to strengthen.”

Sharp slump in imports helps Philippine peso rally against dollar

Imports slumped 41% year-on-year in May following a record 65% tumble in April. That’s a continuation of a trend seen in the first quarter, when a decline in goods imports outpaced a drop in exports, narrowing the country’s goods trade deficit to $10.2 billion from $12.2 billion a year previously.

The smaller gap is helping offset the impact of a decline in remittances from the Philippines’ overseas workers, which is expected to weigh on the currency. Bangko Sentral ng Pilipinas estimates a 5% slide in remittances this year to $28.6 billion.

The Philippines is bracing for its deepest economic slump in more than three decades, with a contraction of 2% to 3.4% on the cards for this year as virus cases continue to rise. President Rodrigo Duterte said he will “have to be very circumspect in reopening the economy” given the recent spike.

This year will be the year that investment drops off, and with it demand for imports and dollars, “which translates to the stronger peso story,” said Nicholas Mapa, senior economist at ING Groep NV in Manila.

https://ph.yahoo.com/news/import-collapse-turns-into-a-boon-for-philippines-currency-053610883.html
 

 

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SkyMan

It also has to do with travel restrictions.  With Filipino tourists not allowed out there was less demand for dollars.  

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smokey

Well all them billions in loans converted to peso must also effect 

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to_dave007

"Imports slumped 41% year-on-year in May following a record 65% tumble in April."

If I read that right, since the numbers are year-on-year, imports have started to recover.

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smokey

i am curious when a country borrower's  money from an outside source and injects it into economy how is it counted on GDP

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streak03
On 7/13/2020 at 1:02 AM, smokey said:

i am curious when a country borrower's  money from an outside source and injects it into economy how is it counted on GDP

Well, when you have no intention of ever paying it back...

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East Saxon
On 7/16/2020 at 12:43 AM, streak03 said:

Well, when you have no intention of ever paying it back...

To a Filipino a Loan =Gift.

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BossHog
To a Filipino a Loan =Gift.

You always ask for collateral. If they want a gift and you're happy with that then fine. Otherwise, collateral of 120% of the loan amount is the way to roll. 

You want 20k, leave me a bike. You want 100k prenda me some copra land.

 

 

 

 

 

 

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lamoe

P52.76 highest shown

Never have had the loan is a gift problem - but them Tata is the one they have to deal with :biggrin_01:

 

image.png.938a1e76a055ee48d00d8d78824af2e9.png

Edited by lamoe
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