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USD/PHP Anyone Else see what I see? :)


SirMadrigal

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SirMadrigal

http://finance.yahoo.com/echarts?s=USDPHP%3DX+Interactive#symbol=;range=3m;compare=;indicator=volume;charttype=area;crosshair=on;ohlcvalues=0;logscale=off;source=undefined;

 

Looks like the Ole Greenback has been playing with some resistance levels against ye Old Peso as of late, its been flirting with a breakout , USD up almost 6.42% over last 90 days.

I smell break out! Wonder what is going on inside the Central Bank of RP that we don't know about, the Dollar isnt getting much stronger, its treading a bit of water, so looks like the Peso may be ready to take a dump.

 

Been studying the Asian charts a lot closer lately, also looks like something may be brewing in Japan as well.

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Skywalker

 

looks like the Peso may be ready to take a dump.

 

'Hot money' being taken out?

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smokey

in jan it hit 39.9 a sad day in deed now 43.7 is nice but i do miss the old 55

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SirMadrigal

in jan it hit 39.9 a sad day in deed now 43.7 is nice but i do miss the old 55

Dont know if it will be near 55 anytime soon but I think high 40's very realistic.

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smokey

Dont know if it will be near 55 anytime soon but I think high 40's very realistic.

i already am getting an extra 2,960 peso a month time to start looking for a new car 

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cebubird

Dont know if it will be near 55 anytime soon but I think high 40's very realistic.

 

Hope you are right. Too bad it hovered around 40 whole time we were building our house.

High 40's might hasten our return to US if we could find reliable caretaker for our house.

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SirMadrigal

i already am getting an extra 2,960 peso a month time to start looking for a new car 

smartcar.jpg

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smokey

 

i already am getting an extra 2,960 peso a month time to start looking for a new car 

smartcar.jpg

i think i will start making payments on the front rims first 

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A_Simple_Man

I am not overly concerned how many pesos you get for a US$ but if you get more then how about bringing the good ole CDN$ along for the ride?

 

Hmmm just looked at the XE chart and it looks like CDN$ has been going steadily up for the last month.  Hope it continues.  44 - 1 suits me fine.

Edited by A_Simple_Man
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JasonEcos

I'm fairly excited about this development. I too miss the 55-1 days. Maybe the government is realizing a weak peso serves the countrys interest better with the majority of income being OFW, foreign investors, tourism, exports, etc. When it went from 55 to 40 I was starting to have visions of it dropping to 30, etc. Which wouldn't make sense but logic isn;t a driving force in the economy here.

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The situation of Asian currencies gaining is due to The Feds, printing more money than necessary. These funds (treasury bonds @ near 0% yield) are coming into the Asian economies.

 

Once the "Santa Claus" printing stops, Asian currencies weaken as most inflows of the US$ into Asian economies is on account of capital inflows (debt/construction money/loans/Venture capital etc) once the interest rates for Treasury bonds go up, flows too will slow down. Thereby weakening Asian currencies, (SGD$ being an exception) Hopefully we might see a weaker Peso but definitely not in the 50P to US$ ratio.

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SkyMan

 

i already am getting an extra 2,960 peso a month time to start looking for a new car 

smartcar.jpg

He said a car, not a Walmart handicap scooter.

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The situation of Asian currencies gaining is due to The Feds, printing more money than necessary. These funds (treasury bonds @ near 0% yield) are coming into the Asian economies.

 

Once the "Santa Claus" printing stops, Asian currencies weaken as most inflows of the US$ into Asian economies is on account of capital inflows (debt/construction money/loans/Venture capital etc) once the interest rates for Treasury bonds go up, flows too will slow down. Thereby weakening Asian currencies, (SGD$ being an exception) Hopefully we might see a weaker Peso but definitely not in the 50P to US$ ratio.

 

You'll have to explain this for me. :huh:  The funds entering the Asian economies are treasury bonds at near 0% yield?  First, who buys such low yield bonds?   Second, if it is the Asian economies that are buying, then surely they are taking USD out of circulation in their economies or from their reserves which, if it has an effect, surely means that the USD strengthens in comparison with the home currency.

 

I kind of agree with your second paragraph except to point out that in the special case of the Philippines the OFW remittance of USD is significant.  Perhaps your point is that for the private sector, even 'risky' low-yield investments in a foreign economy is preferable to home zero-yield home economy bonds.  Referring specifically to the Philippines [this forum is after all about Cebu and the Philippines], recent experience is that hot money is the major inflow of foreign capital; foreign direct investment (FDI) has been rather meager.  There are signs lately that FDI is picking up.  The Philippine Economic Zone Authority (PEZA) and others have reported increasing foreign investment although sadly much of this is in the recreation and leisure industries.

 

The OP alludes to possible Bangko Sentral ng Pilpinas (BSP) strategies.  Yes, they are aware that a strong Peso is detrimental for exports although it helps imports and servicing foreign loans.  A spokesperson for BSP recently said they might consider buying USD in the home (i.e. Philippine) economy to halt further strengthening of the Peso.  A strategy that I suggest is no longer required; a strategy that is similar in effect to the mechanism I am trying to explain in my first paragraph.

 

Another poster in another thread asked a very erudite question: is a consumer economy funded by overseas remittances - such as the Philippines - a viable economy?  It's slightly off-topic here but I mention it as one example that the Philippines' economy has many unique features; we all compare it with the 'traditional' western economies and we may be missing the point. 

 

Back on-topic: the USD has strengthened from 40:1 to 43.5:1 in eight months; similarly, the GBP has gone from 60:1 to 67.5:1.  This has been a steady strengthening, no sudden leaps, and I predict it will continue.  The sheer size of the USA economy as it continues to recover from 2008 will force this.  At the beginning of this year I predicted a rate of 50:1 for the USD after three years.  Well it's already a third of the way there!

 

Now, what will be the reaction of the BSP?  Who knows.  They may 'ride' the situation believing a weaker Peso offers more opportunities; they may fight any weakening thinking that it threatens the buoyant hot money stock market and the Philippines recently hard won credit ratings.  What I'm fairly sure will happen - 'when' is another question and 'by how much' is a third - is that as foreign hot money investments become more attractive then there will be a net outflow from the Philippines.  This is probably when the BSP will take action.

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Buko Beach

'Hot money' being taken out?

Skywalker it right. The hot money flowed into the PSE and the peso gained strength along with the ride. The hot money started to take profits a few months ago and as a result the peso weakened along with the PSE. The two charts (PSE & Peso-USD) look almost the same when over-layed. The IShares MSCI Philippines Index fund also has a similar kind of chart.

 

For anyone who missed the big run-up in the PSE I would start to stockpile cash now on the sidelines and wait for the right time to get in.

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Skywalker it right. The hot money flowed into the PSE and the peso gained strength along with the ride. The hot money started to take profits a few months ago and as a result the peso weakened along with the PSE. The two charts (PSE & Peso-USD) look almost the same when over-layed. The IShares MSCI Philippines Index fund also has a similar kind of chart.

 

For anyone who missed the big run-up in the PSE I would start to stockpile cash now on the sidelines and wait for the right time to get in.

 

I agree that the inflow of hot money pushed up the value of the Peso.  If I read the reports correctly then there is still a net inflow of hot money, it's slowed but it's still positive.  Yes there was some profit taking recently and signs of a counterflow.  Speculators' optimism is keeping the Peso relatively strong.   You'll know it when there is a net outflow: the stock market will tumble and the headlines will scream from the business pages.

 

Edit: Actually investing in the top Filipino companies is not a bad option and investors are finding this out.  So some of the hot money will 'stick.'  SMC are currently suffering from some bad foreign exchange decisions but they will recover. 

 

Edit x 2: I'm not recommending that you invest in the PH stock market, quite the reverse, wait for the tumble.

Edited by GoHuk
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