The Losing Power of the Pinoy Peso-- Again!

[Skidrow]

Thanks to all of your replies..

I guess I'll just have to weather the storm.. I don't feel very bad but I'm not happy either with what's happening. It was a gamble that I took and it's still going to be gamble until the end.

In another matter, I'm just curious why the Philippines is suffering the same bad investment sentiment in Asia/Europe when in fact, the fundamentals are still very much in place. We have a steady flow of OFW remittances, manageable (but still high) inflation, low but realistic growth rate, eVat, etc. Fund managers are pulling out their money from here but why? Don't they find the Philippines a stable and attractive market after the pronouncements of credit rating agencies (Such as standards and poors). Or there is really no confidence in the financial health of market economies anymore?

[tidus1203]

The market is all about PERCEPTION. Perception is only relative to the person in question. The people perceive that the Philippines is risky and risk is not something that is on demand right now kaya you have low yielding less risky assets like the Japanese Yen gaining ground.

[Galactus]

Thanks to all of your replies..

I guess I'll just have to weather the storm.. I don't feel very bad but I'm not happy either with what's happening. It was a gamble that I took and it's still going to be gamble until the end.

In another matter, I'm just curious why the Philippines is suffering the same bad investment sentiment in Asia/Europe when in fact, the fundamentals are still very much in place. We have a steady flow of OFW remittances, manageable (but still high) inflation, low but realistic growth rate, eVat, etc. Fund managers are pulling out their money from here but why? Don't they find the Philippines a stable and attractive market after the pronouncements of credit rating agencies (Such as standards and poors). Or there is really no confidence in the financial health of market economies anymore?

The rule of thumb among investorsis that when they sense a financial crisis brewing, they pull out their funds from emerging markets, and park them in secure, relatively risk-free instruments, like US government securities (T-bonds, T-bills, T-Notes, etc.)

Besides, there are relatively few local securities rated as investment-grade, which offers a handsome yield.

[uls]

Fund managers are pulling out their money from here but why? Don't they find the Philippines a stable and attractive market after the pronouncements of credit rating agencies (Such as standards and poors). Or there is really no confidence in the financial health of market economies anymore?

They perceive the developing world to be more unstable... regardless of fundamentals.

Since the world is falling into recession, they think developed economies would be more capable of handling a recession than the economies of developing countries.

The foreign funds are also forced to sell.

Lots of hedge funds are liquidating coz their clients are pulling out their money. Same thing with mutual funds.

[Gen. Miting]

in light of all these, looks like one local major bank is expanding all their branches. from one floor to two floors sa mga small town branches and entire ground floor of commercial bldgs sa mga financial districts.

somebody's buying cheap and are preparing to own much of the Philippines.

although this may seem to look bad, I'm confident that this bank can really save us in the future. no more worries of foreign investor pull-outs in the future coz the cheap stocks can be wholly owned by this Filipino company.

[jpdm]

in light of all these, looks like one local major bank is expanding all their branches. from one floor to two floors sa mga small town branches and entire ground floor of commercial bldgs sa mga financial districts.

somebody's buying cheap and are preparing to own much of the Philippines.

although this may seem to look bad, I'm confident that this bank can really save us in the future. no more worries of foreign investor pull-outs in the future coz the cheap stocks can be wholly owned by this Filipino company.

*ge. miting

any clue?

[jpdm]

Manila Times
October 28, 2008

Peso plunges
The peso has weakened to its lowest level in nearly two years as risk aversion prevailed, closing at P49.399 against a US dollar on Monday, the Philippine Dealing System (PDS) reported. The peso depreciated from Friday’s close of P48.991.
The peso opened P48.995 on Monday and traded to a high of P49.399 and a low of P48.990. Total volume turnover was high at $1.002 billion.
“People are now trading on fear and panic,” a local bank trader told Dow Jones Newswires.
The peso is expected to test P49.50 but would improve before November 1 because of the implementation of the central banks’ reclassification of banks’ financial assets from categories measured at fair value, to those measured at amortized cost.
-- Likha C. Cuevas-Miel And Maricel E. Burgonio With AFP

Well, what are the concrete steps the government is doing to stop the peso's steep fall?

[jpdm]

The OFWs are happy because there will be more pesos for every dollar they earn....

And more pesos for every dollar that we export....

[niky]

RE: Local markets... it's not an inherent weakness in any of the emerging markets (though our market is not strong...)... it's just, like uls says... investors are saying "to hell with return on capital... we just want our capital back!".

Damn... this is really bad... but it's worse because we let the currency float for so long. This brings to mind what some of us were talking about before... that the government "peg" the peso at a single level and leave it there... would have meant more meaningful dollar inflows, better exports... etcetera. Whether the peso is at 40:1 or 60:1 is meaningless in and of itself... what matters more is what a Filipino family can do with those 40 pesos.

If it's at 40:1 and rice is at 40, while they earn just 250 a day... not so much.

But if it's at 60:1 and rice is at 40 (locally produced) while they earn 300 a day... that's better.

As an aside... should this be merged with "Financial Crisis: The Philippine Version"? We're talking about the same things, anyway.

[uls]

Well, what are the concrete steps the government is doing to stop the peso's steep fall?

the bangko sentral can sell dollars. but that won't help much.