Ok Folks ... Get Ready To Tighten Your Belts

[Mike S]

The dollar will continue to fall and the peso will get stronger ....... as copied elsewhere ......

"Looking forward, the major development ahead will be the move to investment grade, which would have a more significant market impact… The PHP has been the best performer in EM Asia – up 5 per cent YTD… The recent risk-on rally has pushed USD/PHP below its key 42 technical level and momentum trading might see the PHP retesting the 40.445 lows set in February 2008."

http://www.bbc.co.uk/news/business-18718090

Philippines credit rating upgraded to a nine-year high

The Philippine Stock Exchange has been amongst the best performers in the region this yearContinue reading the main story

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Ratings agency Standard & Poor's (S&P) has raised the Philippines' credit rating, taking it one step away from its aim to become an invetsment grade economy.

S&P raised it rating to BB+ from BB, the highest level since 2003.

The rating agency said the upgrade was a result of the government's improving finances.

The higher rating grade is likely to help the Philippines attract more investment, a key to further growth.

"The foreign currency rating upgrade reflects our assessment of gradually easing fiscal vulnerability, as the government's fiscal consolidation improves its debt profile and lowers its interest burden," said S&P.

"The rating action also reflects the country's strengthening external position, with remittances and an expanding service export sector continuing to drive current account surpluses."

Two of the three major international rating agencies now have the Philippines one rung below investment grade.

http://blogs.ft.com/beyond-brics/2012/07/05/philippines-credit-rating-up-inflation-down-rate-cut-coming/#axzz1zp37BuFF

Standard and Poor’s upgraded the Philippines’ long-term foreign currency rating on Wednesday to BB from BB-, just one notch below the magical investment grade.

It’s a vote of confidence from the rating agency, so combined with decent inflation figures released on Thursday, does it give the central bank room to cut rates?

S&P said in its statement that the upgrade:

…reflects our assessment of gradually easing fiscal vulnerability, as the government’s fiscal consolidation improves its debt profile and lowers its interest burden… The rating action also reflects the country’s strengthening external position, with remittances and an expanding service export sector continuing to drive current account surpluses.

The upgrade matches Fitch’s assessment and is one level above that of Moody’s. So far so good.

Source: Capital IQ. Click to enlarge

The currency and stock market have responded accordingly to the news: the peso strengthened 0.35 per cent to around 41.67 to the dollar on Thursday, reaching a 4-year high. The Philippines stock exchange was at a year-high of 5,369, up 0.28 per cent.

Benoit Anne of SocGen said in a note:

Looking forward, the major development ahead will be the move to investment grade, which would have a more significant market impact… The PHP has been the best performer in EM Asia – up 5 per cent YTD… The recent risk-on rally has pushed USD/PHP below its key 42 technical level and momentum trading might see the PHP retesting the 40.445 lows set in February 2008.

Thursday’s inflation figures showed CPI at 2.8 per cent in June (from 2.9 per cent in May), and core inflation (non-food) at 3.7 per cent, helped by the respite in oil prices. The figures are within the central bank target. So what’s the central bank response?

Diwa Guinigundo, the bank’s deputy governor, told Reuters the figures “provide more room for monetary manoeuvring given the global uncertainties and need to avoid asset-price inflation”. That’s quite a strong hint of a rate cut. The next monetary policy meeting is on July 26.

With current borrowing rates set at 4 per cent, and with GDP growth expected to be 5-6 per cent for the year, any rate cut would be something of a preemptive strike against the impact of a global slowdown. But perhaps that’s not a bad idea.

[Dave Hounddriver]

*Sigh* It looks like I will see the end of the cheap living at some point during my Philippine stay. Not sure what is driving the economy but I suspect it has to do with all the oil in the Spratleys. That's what makes a poor country unaffordable. What countries have no oil to sell?

[cebu rocks]

I believe it has more to do with the US dollar falling than the RP rising . But the RP is going to grow with the new government in place . The days of 50-1 are long gone for Americans but canadians and aussies may see it again :)

[OldUgly&Cranky]

I believe it has more to do with the US dollar falling than the RP rising . But the RP is going to grow with the new government in place . The days of 50-1 are long gone for Americans but canadians and aussies may see it again :)

i dont know about Canadians seeing those kind of rates as were around par with the us dollar right now and were only getting 41 pesos to the cdn dollar as of last week went i sent threw western union !! it would be nice if we would be getting that kind of rate definitely would be easier on my pocket book , but like allot of thing ie: hosing markets , economy , theres always a bubble and im sure it will burst , i'll use the beer and cigarette price to determine whether its too expensive to live there !!! when it cost me the same price as it does in Canada to buy these things its time to start Packing and head outta dodge !!! HAHAHA

O-U-C :thumbsup:

Edited July 6, 2012 by OldUgly&Cranky

[i am bob]

OUC - does Western Union still convert from Canadian to American and then to Philippine Peso? They did that to me when I sent money to Taiwan... I refuse to deal with them ever again!

CR - As for the Canadian and American $? This last rise was our $ going up as opposed to before when the US $ went down... We should be getting a good exchange right now (my source says 41.4633) had the Peso not gone up too! It's going to be touch and go for a while but I don't think the CDN$ will go much lower than it is now and probably up to around P45 over the next couple years - and then back down again to around P40. Of course projected values only hold validity for 20 seconds from the time they are stated.

Mike S - Oil in the Philippines? Not according to China! That oil is theirs! And they will stop at nothing to either have it as theirs (which will take many years to settle) or they will try to take it by force and thus all the doomsday prophecies will become valid. I'm betting on many years of international diplomatic bumbling before somebody gives everything to China but you never know... The big thing is what this means to us - prices aren't going to go very high because the Peso won't go much higher than it is now.

Bottom line? Cheap San Magoos for all - unless you would rather a cold Coke?

[OldUgly&Cranky]

OUC - does Western Union still convert from Canadian to American and then to Philippine Peso? They did that to me when I sent money to Taiwan... I refuse to deal with them ever again!

Hi bob not to my knowledge when im sending $ i just pay in canadian and they give me the amount of pesos she will receive !! actually i have never heard of them doing that b4 and i have been sending for years !!! i use to bank transfer but it took too long sometime 2-3 days all that bs to save a few dollars on the transfer fee and 1 % better exchange rate , i signed up for the western union member card and now i dont even fill out the paperwork i just show them the card and tell them how much im sending and also i get a 2 $ discount of transfers for me its the best option !! others maybe different !!!

O-U-C :thumbsup:

Edited July 7, 2012 by OldUgly&Cranky

[Mike S]

Not according to China! That oil is theirs! And they will stop at nothing to either have it as theirs (which will take many years to settle) or they will try to take it by force and thus all the doomsday prophecies will become valid.

Well Bob maybe we better start converting our dollars (US ... Canadian ... and Oz) to CNY ..... :mocking: ...... I hate to say it but if it does come down to a global war with China she will have allies I'm sure and I hope I am sitting in a urn on a mantle some place before it all goes kaputt ....... yea I know I'm a coward ...... :hystery: :hystery: :hystery: :hystery:

Edited July 7, 2012 by Mike S

[i am bob]

OUC - does Western Union still convert from Canadian to American and then to Philippine Peso? They did that to me when I sent money to Taiwan... I refuse to deal with them ever again!

Hi bob not to my knowledge when im sending $ i just pay in canadian and they give me the amount of pesos she will receive !! actually i have never heard of them doing that b4 and i have been sending for years !!! i use to bank transfer but it took too long sometime 2-3 days all that bs to save a few dollars on the transfer fee and 1 % better exchange rate , i signed up for the western union member card and now i dont even fill out the paperwork i just show them the card and tell them how much im sending and also i get a 2 $ discount of transfers for me its the best option !! others maybe different !!!

O-U-C :thumbsup:

Check out World Remit... I'm not saying they are any better but I have been very happy with their service! Usually they say upfront that it will cost me $10 to process but when I'm done, they have dropped it down to $5.99. Their interest rate is reasonable - this morning was 40.664065 (the actual rate was 41.4633), you can have it picked up, delivered, sent to a bank or mobile account or even top-up a phone. You can also select between the amount sent by what they receive in PHP, a certain amount of CDN $ before converting or even just how much you want the total amount you want to pay (ie: i got $100 bucks and that's it - take your fee and send the rest). And they are fast! The first time I sent some, it went for pick-up and she was notified it was there, she picked it up and I was notified that she had picked it up within 2 hours. And nicer yet is I do this all online and using my debit card - they have major bank internet capability where they send you to the bank's website to complete the payment. Yeah, I kind of like this one!

[Americano]

I was read a prediction yesterday where the USD would exchange for 45pesos by the 4th quarter of this year. I believe it was the Philippines Central Bank prediction, saying the US Dollar would get stronger and the Pesos would get weaker. One factor of many was the Ford factory closing in the Philippines. I hope their prediction is correct because the rate has been going lower lately.

[Americano]

I found the article which says we will see 45 rate by the 4th quarter, so who are you going to believe. Friday the weather forecasters were saying we would have heavy rain Saturday and Sunday, we didn't get a drop.

http://ph.news.yahoo.com/philippine-peso-expected-depreciate-45-dollar-yearend-052003267.html