depreciation

How to cope with declining US Dollar and rising Peso?

A lot has already been written explaining the reasons behind the fall of the US Dollar but very, very few have offered solutions on how to deal with it. In this article, we give some suggestions on how to face the challenge of a depreciating US currency.

The fall of the US Dollar is very much apparent in the Philippines, with the Peso appreciating by as much as 18.8% in 2007 — making it the year’s best performing currency in Asia.

Although the peso’s rise has brought economic benefits such as lower inflation and higher purchasing power, it also hurts exporters who are currently struggling with rising prices and Overseas Filipino Workers (OFWs) and their families who are now getting less from their dollar earnings.

What then to do in order to deal with a depreciating dollar and appreciating peso?

Here are a few tips.

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Peso may rise to P38 in 2008

To those earning in or holding US dollars, brace yourself because the Philippine Peso might appreciate some more and even increase to P38 by next year.

That’s according to a BusinessWorld article published today:

The peso may appreciate towards P41.50 per dollar by year end and to as much as P38 by early 2008 as dollar remittances from overseas Filipino workers (OFWs) and inflows from the asset sale of local firms surge.

“The surge of dollars gives support to the thought that the peso will be stronger than what it is today… It’s a more sustainable trend right now,” Michael G. Manuel, chief investment officer of Sun Life of Canada (Philippines), Inc. told reporters yesterday.

Mr. Manuel attributes the possible appreciation of the Philippine currency to the sale of assets by local companies, increased remittances of Overseas Filipino Workers (OFW), and expected interest rate cut of the US Federal Reserve.

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