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Why is value of other foreign currencies low in Philippines?

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Why is value of other foreign currencies low in Philippines?

Post by Winston » February 29th, 2008, 6:15 am

In regards to the value of the dollar dropping and the low exchange rate with the peso (now 40 to 1 whereas it was 58 to 1 before) that I was complaining about before, I just looked at all the exchange rate and it seems that all the other foreign currencies are of low value with the peso as well. The Australian, Canadian, and Taiwanese dollar are also very low right now compared to the peso. The Taiwanese dollar is now at 1.1 to 1 compared to the peso, making it almost one to one, which is ridiculous since they are not worth one to one at all!

So, since it’s not only the dollar that’s dropping in value here, doesn’t this mean that it’s not just about Bush or the US economy? If so, what is causing all this? Is the Philippine government or President doing something to hurt the value of all foreign currencies in this country? If so, why do they want to hurt all of us foreigners? And who is benefiting by it?

Anyone know?

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Post by momopi » March 1st, 2008, 1:57 am

The Philippine government has nothing to do with it. It's US monetary policy and the countries that peg their currency to the dollar.

Many foreign currencies peg to the dollar in some way, so if the dollar's value drops, theirs will drop too. A politically correct way to say currency pegging is "pegged to a basket of currencies" without explaining exactly what's in the "basket" and by what ratio.

News from yesterday says that the US Federal Reserve stands ready to make another interest rate cut. To put it in a simple way, whenever the interest rate is cut, the supply of money, as well as inflation goes up, while the value of your money goes down.

So if you had $ saved in a bank account, in savings or CD, the amount of interest that you make will decrease, your money will be worth less, and stuff will become more expensive. This forces people to invest or spend their $, which is the government's attempt to keep recession at bay.

While it sucks for us, it's a great time for Canadians, Europeans, and Filipinos to come and spend $ in the US! Their currency is now worth more and our stuff and real estate is cheaper to them. Many Canadians and Europeans are coming to the US to invest in property.

Look at it this way, Americans have enjoyed the relatively "cheap" prices in Philippines for many years. Now it's their turn to come to the US and say "wow, everything is cheaper than before". What goes around, comes around.

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