Peso Forecast

[JJReyes]

According to two major international financial institutions, the Philippine peso is expected to depreciate against the US dollar to around 57 to 1 by year end.   This would make it three years in the row.  At the present time, the 54 to 1 trading range is being sustained by Bangko Sentral intervention.  One factor contributing to the forecast is the size of the national government budget.  Another is the slow recovery of Philippine exports.  

[Mike J]

The wife and I were certainly thankful for the exchange rate when we replaced our roof after the typhoon.   For those with foreign income in dollars it also helps cushion the effects of inflation.   Of course that is a double edged sword as the rate has dropped as low as 40 in recent years.

[BrettGC]

5 minutes ago, Mike J said:

The wife and I were certainly thankful for the exchange rate when we replaced our roof after the typhoon.   For those with foreign income in dollars it also helps cushion the effects of inflation.   Of course that is a double edged sword as the rate has dropped as low as 40 in recent years.

We've experienced this with the AUD vs PHP.  In the 12 months I've been here it's gone from 36, down to 33 and back up to 39.  That's 20% variation so nothing to sneeze at in anyone's language.  Thankfully I planned for worst case scenario with the budget.  Thankfully both my pensions (military and military disability) are indexed against inflation twice a year.  4% kicker in January so the Australian Bureau of Statistics was saying that the 12 month average rate in Australia was 8% at the time; it was a similar amount in July '22.  The Philippine inflation rate is officially at 5.8% annually.  I'm finding the PI numbers a little hard to believe given our personal experience with the rise in prices, at least where we're living. 

[scott h]

16 minutes ago, Mike J said:

rate has dropped as low as 40 in recent years.

Dont I know it!!! we build our house when it was at 41.....If we build it today we would have mansion 

[JJReyes]

My personal strategy would be to keep my money in foreign funds, exchanging every month the amount needed for cost of living.  This would average the exchange rate over a one-year period.  For large, onetime expenses like buying appliances, you try to time it based on currency exchange forecasts.

[hk blues]

2 hours ago, JJReyes said:

My personal strategy would be to keep my money in foreign funds, exchanging every month the amount needed for cost of living.  This would average the exchange rate over a one-year period.  For large, onetime expenses like buying appliances, you try to time it based on currency exchange forecasts.

My strategy is to keep my money outside and transfer over once a year the annual expenses (in addition to the emergency fund I keep here) - I time the annual transfer based on exchange rate but at the end of the day, we are in the lap of the gods unless we have all our funds in php.  As for currency exchange forecasts - wouldn't rely on them at all as much of them are based on an arithmetic calculation using the current rate as the starting point - I've monitored the GBP to PHP a fair bit and when the rate goes up/down lo and behold the forecast follows suit immediately.  

[OnMyWay]

On 2/2/2023 at 6:24 AM, JJReyes said:

According to two major international financial institutions, the Philippine peso is expected to depreciate against the US dollar to around 57 to 1 by year end.   This would make it three years in the row.  At the present time, the 54 to 1 trading range is being sustained by Bangko Sentral intervention.  One factor contributing to the forecast is the size of the national government budget.  Another is the slow recovery of Philippine exports.  

I don't think Bangko Sentral has complete control.  There are other factors, which I am sure BS takes takes into consideration.

Anecdotally, I think the peak of the dollar / peso rate, at 59, coincided with the U.S. starting to raise interest rates.  This week, they raised again and the dollar peso rate fell a lot in one day. The U.S. will continue to raise rates this year, so I will wait and see about the trend reversing.  57 may not be on the table this year.

BPI is now 53.60 today.  I exchanged a lot at 58-59.  In the coming days, I am planning to change pesos back to dollars, and will realize a profit of ~1000 USD.

[hk blues]

16 minutes ago, OnMyWay said:

I don't think Bangko Sentral has complete control.  There are other factors, which I am sure BS takes takes into consideration.

Anecdotally, I think the peak of the dollar / peso rate, at 59, coincided with the U.S. starting to raise interest rates.  This week, they raised again and the dollar peso rate fell a lot in one day. The U.S. will continue to raise rates this year, so I will wait and see about the trend reversing.  57 may not be on the table this year.

BPI is now 53.60 today.  I exchanged a lot at 58-59.  In the coming days, I am planning to change pesos back to dollars, and will realize a profit of ~1000 USD.

Certainly as interest rates rise, the currency should also rise but there are numerous other factors coming into play which can disconnect the two.  If we take the GBP-PHP as an example, we are pretty much where we were a year or so ago but we have 10 interest rate rises in the UK since then. Similarly in the US, rates have dropped 10% over the past few months despite US interest rates rising in that time.  

More chance winning on the horses IMHO! 

[JJReyes]

Currency exchange forecast is merely an educated guess as to value six months or one year from now.  The purpose is to guide traders, manufacturers, financial institutions, etc. whether to hold or sell a specific currency.   My personal observation is the peso seems to weaken around August or September when importers start buying staples and merchandise for the Christmas season.  It strengthens around January or February when banks report to the Sentral Bank the deposits and foreign exchange by OFWs.  On a medium-term basis (5 years), I look at national budget expenditures and import/export trends.  Since the pandemic, the Philippine government has been borrowing from overseas like crazy.  They will have to pay interest and return the loan amount someday.

For this trip, I exchanged a significant amount of dollars to pesos when the rate was above 57.  The rate is now below 54 and my average expenditure should be around 55.  This is still a very good rate since my original calculation, for budget purposes, was 50.  That's a 10% bonus.  

[russellmania]

On 2/3/2023 at 12:16 AM, OnMyWay said:

I don't think Bangko Sentral has complete control.  There are other factors, which I am sure BS takes takes into consideration.

Anecdotally, I think the peak of the dollar / peso rate, at 59, coincided with the U.S. starting to raise interest rates.  This week, they raised again and the dollar peso rate fell a lot in one day. The U.S. will continue to raise rates this year, so I will wait and see about the trend reversing.  57 may not be on the table this year.

BPI is now 53.60 today.  I exchanged a lot at 58-59.  In the coming days, I am planning to change pesos back to dollars, and will realize a profit of ~1000 USD.

We had the same strategy. I exchanged as much as I could also when the peso hit P59. And still doing it now because it seems slowly slipping back to under P50 soon.