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Who is afraid of a strong peso?


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Another point you have not made is that service industries such as call centres are very mobile (unlike manufacturing plants).  Once that line is crossed between cheap labour and more expensive labour then there's very little to stop the company redeploying. 

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As an economist, this is the only pertinent sentence in the whole article.  I watched with interest the rise of the Thai baht over the last few years, another Country ravaged by poor governance, corru

This is comedy right? You surely understand that with Government contracts being as transparent as a plate of sheet steel, the resulting corruption stifles everything, since everybody knows what is go

The U.S. and Europe share a common problem - too much debt.  There are only two ways out of this abyss.  The first is austerity which is politically unpopular and thus difficult to achieve.  The secon

Another point you have not made is that service industries such as call centres are very mobile (unlike manufacturing plants).  Once that line is crossed between cheap labour and more expensive labour then there's very little to stop the company redeploying. 

yes and no.

 

Call centres almost by definition require good language skills.  India is already becoming an expensive place for a call centre. Where do you go after the Philippines for good English language skills and low cost labour?

 

Running out of options I reckon.

 

And you cant onshore call centres very easily.  They have a terrible reputation in the West, high turnover, ...,  theyre considered the dark satanic mills of the 21st century back here in civilisation.

nobody will there unless theyre forced to.

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smokey

Well, what happens in the Philippines will be of no concern to me if the US dollar collapses against the Philippine peso. I would no longer be able to live here. I would imagine that most foreigners living here would be in that same situation is their home country's currency took a dive against a stronger peso. Most foreigners who retire here are receiving their income in their home country's currency, so it hurts when the value drops against the peso.

but you are taking the correct steps when you buy then sell land in peso .... any asset you hold in philippines is only going to go up in relationship to a stronger peso,,  If you build a house for say 10 million when the peso is weak and then sell it for 10 million years later you have made a profit  

 

yes and no.

 

Call centres almost by definition require good language skills.  India is already becoming an expensive place for a call centre. Where do you go after the Philippines for good English language skills and low cost labour?

 

Running out of options I reckon.

 

And you cant onshore call centres very easily.  They have a terrible reputation in the West, high turnover, ...,  theyre considered the dark satanic mills of the 21st century back here in civilisation.

nobody will there unless theyre forced to.

well call center will shrink many of the sales calls i get are automated ,,, once the system is set up 1 agent can handle 10 automated callers

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POTATOMAN

THE £ has gone from over 68 - just over 61 in 6 months, that hurts

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Headshot

but you are taking the correct steps when you buy then sell land in peso .... any asset you hold in philippines is only going to go up in relationship to a stronger peso,,  If you build a house for say 10 million when the peso is weak and then sell it for 10 million years later you have made a profit  

That is true about the possible profit due to the stronger peso. However, the stronger the peso becomes, the softer the housing market here becomes...and the harder it will be to sell your property at that price.

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InternetTough

 

imply stating that the peso and baht are not strong, the other currencies are weak, is like saying

 

I don't doubt that the peso is increasing in value due to a lot of good news about the Philippine economy and steadily decreasing government debt. As for your crack about believing that the world was created in seven days...that is not a common belief in any large community on the planet.

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USMC-Retired

It has zero to do with the Philippines in general.  It has to do with return of money for bonds and stocks.  They manipulate the market in some aspects.  Nothing has changed here expect there is less confidence in other markets.  Thus people are more willing to risk money on what is considered Junk Bond status here in the Philippines.  It is just fiat currency or hot money that is flowing.  It has zero long term stability because the Government is not improving infrastructure for the long term.  So when the money leaves so does the peso rate.   Investors and people are hyping markets to drive the prices.  Yet in reality what has changed?  Power, Road, Industry, unemployment, commercial entities.  None of that is better today they 3 years ago.  It is 100% artificial in nature.  The confidence is coming from Aquino and his anti corruption stand point.  Yet they are one scandal from collapse.  Because they still rank in the bottom 15% in all categories for foreign investment.  

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Guy60417

The dollar must be dropping faster than we thought. I just booked a flight on Cebu Pacific to Zamboanga for next week. The cost is PHP3856.56, which I paid for with my US credit card. They offered me the option of being billed in dollars -- $100.28. Meaning a rate of 38.46.

 

I declined their kind offer.

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InternetTough

http://www.oxan.com/display.aspx?ItemID=DB180748

 

The government acknowledges the infrastructure problem and is spending more on it. The government finances of the Philippines are actually quite good and the bond rating is moving up. The Philippines has quite a lot of good businesses with good balance sheets. The population curve favors growth, as well as consumption. The OFW remittances help insulate the economy from external shocks---family needs remain constant. 

 

There is a lot more to the Philippines than just that others aren't looking so good now.

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USMC-Retired

They are one major issue away.  Things like this make investors nervous and pull out.  The MILF peace accord that Aquino signed helped because it showed the country was moving forward.  Yet now they are attacking Malaysia so where does the funding come from if they are forced relocate 80,000+ Filipinos back in the Philippines.  Or worse yet a gun battle between those 80,000 and armed troops in Malaysia. Especially considering that the Defense Department took one of the biggest hits to improve that infrastructure with peace accord in Mindanao. Spending only 2 Billion dollars for the year.      It is all a facade and there is nothing there.  Not when you read the Forbes riches list top 40 in the Philippines controls 76% of the GDP.  

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smokey

That is true about the possible profit due to the stronger peso. However, the stronger the peso becomes, the softer the housing market here becomes...and the harder it will be to sell your property at that price.

that is because your target is americans in the same boat.... A real melting pot in our subdivision is all the different countries represented our newest resident is from india 

 

 

when and if i ever get serious about selling i need to place an add in china and Korea and maybe japan 

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InternetTough

All countries are subject to events. Predicting the future of any country is difficult. The "Sultanate of Sulu" thing could become important for the whole country or it could just disappear. The mental attitude of "nothing but pessimism until all uncertainty is removed" will prevent unjustified optimism, but it will cause one to lose out on opportunities.

 

Here is a recounting of "Dr. Doom" Nouriel Roubini's speech about the Philippine economy:

 

http://ph.news.yahoo.com/economic-prescription-dr-nouriel-roubini-035642949--finance.html

 

He is optimistic overall, but he can do as good a job as anyone on this forum in pointing out the weaknesses and possible future problems.

 

Here is another report of the same speech, with a numbered list of "To Dos" for the Philippine economy as recommended by Roubini:

 

http://www.rappler.com/business/20753-list-nouriel-roubini-s-shopping-list-for-the-philippines

 

The future might be disappointing, there is no doubt that the ship-of-state has to be steered right and maybe it won't be, but there are real reasons for optimism, too.

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USMC-Retired

I am optimistic about the economy and the direction the Philippines is going.  I am not optimistic that peso will continue a trend of strength against all other currencies.  The current state is very speculative on continued growth and the BSP must cap to protect its own national interests.  

 

Remember this is a country of 90 million people 1/3 the population of the US.  The GDP is 2.45% that of the US.  So it is a hell of a lot easier to see money grow when they have so much room to grow.  

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InternetTough

The government doesn't want the peso to rise too high---it works against both exports and remittances. I read somewhere that one option they were considering was borrowing dollars internally. 

 

Maybe they'll keep it at a tolerable level.

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The U.S. and Europe share a common problem - too much debt.  There are only two ways out of this abyss.  The first is austerity which is politically unpopular and thus difficult to achieve.  The second is currency devaluation which is the most commonly used mechanism.  The U.S. can print more money and pay off debts with devalued dollars.  Unfortunately, this methodology creates inflation.  Thus far the U.S. has been unable to reduce spending.  European countries which share a common currency (Euro) don't have the luxury of printing more money unless every country agrees.  This is unlikely.

 

The dollar will continue to decline in value until the democrats lose power.

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