2.17.2021

Heads Up On The Dollar Rate

Heads Up On The Dollar Rate

I explained the reasons for the dollar rate drop that the Philippines has experienced over the last year. The Philippines has been in recession and is therefore not using dollar reserves to buy imported goods. 

Philippines has also been taking in a lot of dollar denominated debt in order to weather the pandemic.

These factors are keeping the dollar reserves high and the dollar rate low.

This could change soon and appears to already be reversing. There has been a .4 peso swing in the last day and the dollar is sitting at 48.33 right now.That is the highest dollar rate we have seen since around early November 2020.

So why am I forecasting the dollar rate increasing further?

NEDA is pushing to raise all regions of the Philippines to MGCQ

The regions that will benefit from this are Metro Manila, the Cordillera Administrative Region, Batangas, Tacloban City, Iligan City, Davao del Norte, Davao City, and Lanao del Sur.

Bringing these regions back online and further opening up the economy will cause a consumption boom in imported goods. That will bring an increase in the dollar rate (all other things remaining equal).

This is not a sure bet and there are a lot of moving parts, but the prospect might make one consider carefully the timing of cashing in dollars for pesos in the near future.


UPDATE 2-18-2021

Since I wrote this post last night the dollar has gone up to 48.44 on 2-17 and today it is back down to 48.34.

Is the bump a temporary one or is the dollar rising on the anticipation of a stronger economy in the Philippines?


UPDATE 2-22-2021

WOW! 48.71 and going!

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