The Losing Power of the Pinoy Peso-- Again!

[tidus1203]

That really only stops the volatility, but no one is powerful enough to manipulate the markets and not even governments.

[jpdm]

That really only stops the volatility, but no one is powerful enough to manipulate the markets and not even governments.

Do you think the government has No BIG AND CRUCIAL ROLE to stop the rapid depreciation of the peso?

Because I remember, you are a firm believer of the free market especially when you rationalized the behaviour of the oil companies as to why they do not want to roll back their prices despite the market dictates that they should (slow demand, cheaper raw materials i.e. crude- non-price factor of supply).

In other words, will you subscribe to the idea that let the market forces determine the value of the peso?

[uls]

syempre market forces ang nagdedetermine sa value ng peso

di naman naka peg ang peso

[jpdm]

syempre market forces ang nagdedetermine sa value ng peso

di naman naka peg ang peso

Naka peg saan? floating rate ba?

Bakit nakikalam ang BSP?

Can you explain...

[tidus1203]

Do you think the government has No BIG AND CRUCIAL ROLE to stop the rapid depreciation of the peso?

Because I remember, you are a firm believer of the free market especially when you rationalized the behaviour of the oil companies as to why they do not want to roll back their prices despite the market dictates that they should (slow demand, cheaper raw materials i.e. crude- non-price factor of supply).

In other words, will you subscribe to the idea that let the market forces determine the value of the peso?

Sure. I am always opposed to government interventions in any form even in the currency markets. If the markets say that the Peso should fall then it should fall. If the markets say it should rise then it should rise.

And the government is not powerful enough to stop the money flows. Its one thing to WANT and its another thing IF YOU CAN. The government does not have enough money to manipulate the currency markets its just too big. The USD/PHP market is a $700M market a day. That is simply too much for the government to chew. All they can really do is smoothen the price volatility but not change the trend where the market wants it to go.

[uls]

Naka peg saan? floating rate ba?

Bakit nakikalam ang BSP?

Can you explain...

peg sa dollar. meron ibang mga currencies naka peg sa dollar

ya peso floating

BSP can defend peso by selling dollars

[Galactus]

The BSP can also use moral suasion, i.e. exhort banks not to overly trade speculatively (but I doubt if this is effective).

But the BSP's ace is to raise its lending rates, thus making it expensive for banks to borrow and engage in speculative trading. Also it can increase the reserve requirements, thus restricting money supply.

Sure. I am always opposed to government interventions in any form even in the currency markets. If the markets say that the Peso should fall then it should fall. If the markets say it should rise then it should rise.

Central banks have to intervene in the market at the 1st sign of a spiraling downward trend. Hindi pwede mag freefall ang piso. Although CB's are supposedly autonomous and independent of government control, in reality, it isn't. A depreciating peso may be good for OFW's and exporters, but is bad for the economy, due to the humongous national debt. Mas maraming piso ang kailangan to pay off the foreign-denominated loans. Who would want that situation? Even the Feds (through the FOMC) intervene when the dollar is under attack.

[niky]

The BSP is intervening because on e of PGMA's "pogi points" is the "strong" peso.

When the peso was appreciating steeply against the dollar, they didn't step in, even though local businesses warned them that a too-strong peso would be bad for the economy (re: exports... buying power of OFWs... dollar inflow worth, etcetera).

They're only intervening now because they're in "panic" mode.

But other governments see the benefit in having a currency "pegged" at a defendably "low" rate. Notice the yen. Now that the yen is gaining in strength against the dollar, the Japanese government is looking at ways to stop it gaining.

And why?

Because, like I've said... a stable currency rate is good for business and export. The number of dollars your peso is worth don't matter jack-crap if that peso still won't buy you anything. It's more important to focus on fundamentals and strengthening local business and manufacture than focusing on an arbitrary exchange-rate. Before the recession started in Japan, they were at a 100+ yen to one dollar rate... but the Japanese weren't exactly poor.

If they'd pegged the peso at 50:1 and left it there, they wouldn't have to be shelling out big-time to shore it up right now.

---

EDIT: though, yeah, Galactus is right about one thing... this absolutely SUCKS in terms of our being able to pay off foreign debt.

Would've been interesting to see the dollar go to the floor... 1 peso = 1 dollar... then we could have paid off our entire debt right away and refinance it all in loans with Zimbabwean currency... which still ain't worth anything...

[uls]

who needs dollars? hehe

Thais to barter rice for oil with Iran
By Javier Blas in London and Tim Johnston in Bangkok

Published: October 27 2008 18:22 | Last updated: October 27 2008 18:41

Thailand on Monday said it planned to barter rice for oil with Iran in the clearest example to date of how the triple financial, fuel and food crisis is reshaping global trade as countries struggle with high commodity prices and a lack of credit.

The United Nations’ Food and Agriculture Organisation said such government-to-government bartering – a system of trade not used for decades – was likely to become more common as the private sector was finding it hard to access credit for food imports.

http://www.ft.com/cms/s/0/c47190fe-a...nclick_check=1

[tidus1203]

Maybe that is how we will be trading in the future as paper money is being inflated in an unprecedented way. Hard assets, own it!