Dollar / Peso

[OnMyWay]

I hope they can do something for us!

http://business.inquirer.net/99335/bsp-eyes-measures-to-curb-peso-climb

[Call me bubba]

I hope they can do something for us!

http://business.inqu...curb-peso-climb

The Bangko Sentral ng Pilipinas said 2013 could be a challenging year as far as preventing an even steeper appreciation of the peso was concerned, noting that a potential investment grade credit-rating for the country could drive more foreign portfolio investments.

Admitting it was actively buying dollars from the market in 2012 to temper what could have been a sharper appreciation of the local currency, the BSP said it expected the need for more action to keep the peso as less volatile as possible next year.

“Capital flows from a [potential] credit-rating upgrade will provide more challenge in terms of keeping the peso relatively stable and minimizing its volatility,” BSP Deputy Governor Diwa Guinigundo told reporters Friday.

In 2012, the peso appreciated against the dollar by more than 6 percent partly on account of significant inflows of foreign “hot money.” After hovering in the 43-to-a-dollar territory at the start of the year, the peso broke into the 40:$1 level before weakening to the 41:$1 band.

Market analysts said the Philippines, together with a few other emerging Asian countries, has become a preferred destination choice for portfolio investments given its favorable economic growth amid the general weakness of the global economy.

The BSP said foreign portfolio investments could grow further in 2013, thereby providing additional appreciation pressures on the peso.

All three major international credit-rating firms—Fitch Ratings, Standard & Poor’s and Moody’s Investors Service—now rate the Philippines a notch below investment grade following rating upgrades over the past two years.

The credit watchdogs cited the Philippine government’s declining debt burden, rising foreign exchange reserves and robust economic growth as among the factors for the upgrade.

“Without the BSP’s participation in the foreign exchange market, the peso could have been firmer, although we had to allow fundamentals to determine the peso-dollar rate,” Guinigundo added.

He reiterated the central bank’s exchange-rate policy of allowing the peso to appreciate specially if such movement was driven by “structural flows,” which included foreign direct investments and remittances.

The BSP, however, said it would temper the rise of the peso if this was due to foreign portfolio investments, particularly those that involve speculation on the peso.

To temper the rise of the peso in 2012, the BSP engaged in heavier dollar purchases that pushed its expenditures and led to its losses. In the first three quarters of the year, the central bank had a net loss of P68.36 billion.

The BSP likewise slapped a higher capital requirement on banks’ holdings of non-deliverable forwards (NDFs), which were supposedly hedging instruments for importers and exporters but were believed to be used to earn from currency speculation.

The BSP also re-issued an old directive prohibiting banks from using money of foreigners from being invested in the central bank’s special deposit accounts (SDAs).

A joint research by First Metro Investment Corp. and the University of Asia and the Pacific said that after a 100-basis point cut in key interest rates in 2012, further rate cuts by the BSP could not be ruled out in the coming year alongside other measures to manage capital flows.

[Okieboy]

In one form or another, virtually every currency in the world is tied to the US dollar. After the Bretton Woods Exchange System collapsed, instead of linking currency value to gold, currencies linked the value of their currency to the US dollar as a reference point. That direct or indirect system still exists.

As the largest reserve currency, the state and stability of the United States dollar can affect the economies of almost every nation, whether the affect is felt directly or indirectly. It can affect inflation, interest rates and stock prices around the globe. Other factors influence individual currencies, to be sure, but the US dollar is the foundation of many currency trade values.

When traded against another currency, the relative value of the USD can rise or fall against that second currency several times each day. The currency exchange base value is set by the United States Federal Reserve each morning, and that value can affect trading volume and prices, along with several other factors in political and socio-economic arenas of the nation.

[earthdome]

I hope they can do something for us!

http://business.inqu...curb-peso-climb

Yes, the exchange rate is important.

More important is what your home currency can buy in your home country or in the Philippines.

A US inflationary monetary policy over the last 5 years has been stealing real wealth from Americans. Most other countries follow suit and do the same resulting in wealth being stolen by inflationary monetary policies around the world.

The easiest way for the Philippines to stay in the 40-45 peso/USD range is for the Philippines central bank to go on its own inflationary monetary binge. Which means there will be more pesos chasing about the same amount of goods resulting in increased prices in the Philippines. Resulting in no real gain for those of us who use USD.

[Okieboy]

Yes and as i said oil is the major factor

Since only the US Federal Reserve can print the US$, the US control the flow of oil. The US essentially owns the world’s oil for free because oil is denominated in US$ and the US$ is the only fiat currency for trading in oil.

So long as almost three quarter of world trade is done in US$, the US$ is the currency which central banks accumulate as reserves. But central banks, whether China or Japan or Brazil or Russia, do not simply stack US$ in their vaults. Currencies have one advantage over gold. A central bank can use it to buy the state bonds of the issuer, the USA. Most countries around the world are forced to control trade deficits or face currency collapse, but not the USA. This is because of the US$’s reserve currency role and the underpinning of the reserve role is the petrodollar. Every nation needs to get US$ to import oil, some more than others. This means their trade targets US$ countries.

Because oil is an essential commodity for every nation, the Petrodollar system, which exists to the present, demands the buildup of huge trade surpluses in order to accumulate US$ surpluses. This is the case for every country but one — the USA which controls the US$ and prints it at will or fiat. Because today the majority of all international trade is done in US$, countries must go abroad to get the means of payment they cannot themselves issue. The entire global trade structure today works around this dynamic, from Russia to China, from Brazil to South Korea and Japan. Every country aims to maximize US$ surpluses from their export trade. Currently over $1.3 trillion of newly printed US$ is flooding into international commodity markets each year.

[earthdome]

Yes and as i said oil is the major factor

Since only the US Federal Reserve can print the US$, the US control the flow of oil. The US essentially owns the world’s oil for free because oil is denominated in US$ and the US$ is the only fiat currency for trading in oil.

So long as almost three quarter of world trade is done in US$, the US$ is the currency which central banks accumulate as reserves. But central banks, whether China or Japan or Brazil or Russia, do not simply stack US$ in their vaults. Currencies have one advantage over gold. A central bank can use it to buy the state bonds of the issuer, the USA. Most countries around the world are forced to control trade deficits or face currency collapse, but not the USA. This is because of the US$’s reserve currency role and the underpinning of the reserve role is the petrodollar. Every nation needs to get US$ to import oil, some more than others. This means their trade targets US$ countries.

Because oil is an essential commodity for every nation, the Petrodollar system, which exists to the present, demands the buildup of huge trade surpluses in order to accumulate US$ surpluses. This is the case for every country but one — the USA which controls the US$ and prints it at will or fiat. Because today the majority of all international trade is done in US$, countries must go abroad to get the means of payment they cannot themselves issue. The entire global trade structure today works around this dynamic, from Russia to China, from Brazil to South Korea and Japan. Every country aims to maximize US$ surpluses from their export trade. Currently over $1.3 trillion of newly printed US$ is flooding into international commodity markets each year.

Correct. The big problem is out of control US government spending. This results in more US treasury debt notes than the rest of the world is willing to purchase. So now the Federal Reserve itself is buying the bulk of US treasury debt notes. The fact that the USD is the worlds reserve currency and dominates oil trading are the only things propping up the USD.

[Markham]

The big problem is out of control US government spending. This results in more US treasury debt notes than the rest of the world is willing to purchase. So now the Federal Reserve itself is buying the bulk of US treasury debt notes. The fact that the USD is the worlds reserve currency and dominates oil trading are the only things propping up the USD.

I do wonder for how much longer the US Dollar will remain as the world's reserve currency and for how much longer the Federal Reserve will print Dollar Bills in the current profligate way and continue to buy-up US toxic debt. There are some within OPEC and more in the non-aligned oil producers (eg Iran) who'd be very happy to price and sell oil in some other stable currency and as far as I can judge, there are only two possible contenders: the Euro and the Chinese Yuan.

[Mike S]

The Philippines is smart ...... paying off the Phil dept of US $ using money gained by high priced exchange rate of pesos against $s plus getting the rating companies to up it's credit rating (which to me is inflating it big time) and trying to show the world how much better off the Phils is now .... when in fact the country is still very much in debt and there are scores and scores of homeless and starving people living here .... nothing has changed to better the lives of the poor ..... just enhance the lives of the rich ..... I see nothing new for education ..... healthcare ..... highway systems ..... transportation systems ..... housing or the legal system to warrant such ridicules credit rating increases ... .... a very few corrupt officials were dealt with but scores of others go unchecked ..... bunches of big fish are still in the judicial system for graft and corruption but their accusers are either dying off or being bought off and so the cycle just continues .....

Am I complaining about all this ..... nope ..... makes no difference to me ...... just that I feel sorry for the poor people struggling to get a head while taking 1 step forward and 3 steps back ..... :cheersty: