The Morning Eclipse

Friday, September 22, 2006

What's with 49

As of last monday, the Peso has breached the 49:1 dollar barrier. What's so important with it anyway?

1) For one, it will mean our Peso can buy more US greenbacks!

2) Once this psychological barrier (as what everyone calls it) is broken, we can expect the Peso to freely strengthen further.

3) Interest rates will drop. Now that more people want the Peso, the Bangko Sentral has more leeway wtih its monetary policies. They can lower interest rates on Peso accounts- and loans.

4) Lower interest means everyone can borrow cheaply. More money to spend, more businesses earn, more jobs created, better economy.


1) Buy Peso time deposits now while interest rates are around 5%. If you wait further, OFW dollar remittances will start coming in. Peso will strengthen again and interest rates will go down further.

2) For dollar hoarders out there, I say still hold on to your dollars. Historically since 1988, the Peso has depreciated on average at around 6% a year. If you have dollar accounts right now, don't sweat. You still have not lost your money. You just lost your interest as the dollar depreciated but your principal is still intact. Since February, the Peso has only appreicated 4%- no worries then.

Practice makes perfect.


Monday, September 18, 2006

Not yet a strong Peso after all

Recently, I've been observing the steady rise of the Peso against the US Dollar. In fact I have been convinced that the Peso is getting stronger.

Sad to say, this may not be so. The reason for the strong Peso is still mostly due to the region's stronger currency. If you will notice, Southeast asia's currencies' have all been performing well- this includes the Peso. As a result, we have a steady 50:1 exchange rate.

To give credit to the government, they have been performing well. The continuous release of good news and the absence (gag order perhpas?) of bad news have all contributed to the strong Peso.

As a matter of fact, we have been getting better credit ratings lately from the rating agencies. For those unfamiliar with the significance of these ratings, rating agencies rate how good a payer you are. The higher the rate, the more trusting banks will be towards you. A more trusting bank gives lower interest rate as they know you won't run away or default on your payment. Therefore, a lower interest rate means less money going to interest payments and more money for the country's development. But how does this really affect our Peso?

As we all know, in the Philippines, the Peso is a barometer. It is a vote of confidence on the country. So as long as the country is doing good, the stronger the Peso becomes. Philippines has lots of dollars. These dollars are just in the hands of cautious businessmen.

Does this then mean the Peso will breach 49:1? Too early to say. Why so?
1. We have been experienceing an unusually peaceful third quarter. No coup, no people power- yet.
2. OFW remittances are still far away. Their dollars are not yet coming in.

Until November comes, and if the Peso is still at 50:1, I can safely say Peso may definitely breach 49:1.

1. Wait until November. If the Peso is still strong, better load up on your Peso time deposits. Interest rates will drop. By February, the country will have more dollars than it needs.

As for me, I've already taken my bet and acquired a Peso time deposit. Good decision? We'll see...

Practice makes perfect. For your comments, you may email me at


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I'd like to thank Jona for inspiring to write my blog again...


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