The Losing Power of the Pinoy Peso-- Again!

**uls** · October 29th, 2008 05:19 PM

yes, exactly

hard assets > paper

--

Abangan...

Fed rate cut

expectation: 50 basis points... sending Fed fund rates down to 1%

**jpdm** · October 29th, 2008 06:28 PM

* Tidus, ULS

Do you really think our government will just allow the market forces determine the value of the peso, and let it go into a free fall?

Do think then that this is the most pragmatic way to do it?

kasi, especially you ULS that you claimed that you already know exactly that the global economy vis-a-vis with the global financial system will go this way......

unfortunately, one of the casualty right now is the Pinoy peso...

Im very curious about your assessment of what will happen to our peso in the next months and years....

**boybi** · October 29th, 2008 06:55 PM

Originally Posted by jpdm

* Tidus, ULS

Do you really think our government will just allow the market forces determine the value of the peso, and let it go into a free fall?

Do think then that this is the most pragmatic way to do it?

kasi, especially you ULS that you claimed that you already know exactly that the global economy vis-a-vis with the global financial system will go this way......

unfortunately, one of the casualty right now is the Pinoy peso...

Im very curious about your assessment of what will happen to our peso in the next months and years....

It will. The Phil. Gov't doesn't have enough money to counter the free fall of the peso. The BSP have around USD30B in dollar reserves. How many days do you think this will last if the BSP intervenes everyday? (And I don't think the BSP would even allow its reserves to even reach half of what it is right now.)

**uls** · October 29th, 2008 07:51 PM

ya... the forex market is huge. All of BSP's dollars is just a drop in the ocean.

---

i never claimed to know where all this is headed

i just followed this crisis day by day (literally) since last year

so i'm not surprised about what's happening now.

Tidus has a far greater understanding of what's going on.

Remember, Tidus made bets on the yen soaring.

I'm sure he made a killing.

---

The dollar shouldnt be strong.

Considering the Fed rate cuts (expect another one)

and the trillions of new dollars created by the Fed...

but since the world's economy is screwed, the dollar is attractive.

If it wasnt for the USD being the world's reserve currency, and the US being the most stable country in the world,

the USD should be toilet paper.

**jpdm** · October 30th, 2008 08:07 AM

Manila Standard
October 29, 2008

[SIZE=3]Bangko Sentral intervenes to support peso[/SIZE]

THE central bank sold dollars yesterday to support the peso, which fell to a two-year low of 49.58 before recovering to close at 49.105, dealers said.

The local unit slumped to 49.399 against the dollar on Monday as investors continued to drop commodities and Asian currencies to buy the greenback,

But the Monetary Board, the central bank’s policymaking body, could ease its monetary policy to prevent the economy from slowing down further, said Trade Secretary Peter Favila, the government representative in the board.

“We are closely watching the developments in the market, and we should take comfort in our sound and stable system,” he said.

The peso recovered slightly even as Asia’s battered stock markets rallied Tuesday after several days of heavy losses as investors hunted for bargains despite continued worries about the ailing global economy.
AFP, with Joyce Pangco Pañares

Well, BSP is continuously supporting the peso to prevent it to slide further...

**boybi** · October 30th, 2008 08:13 AM

Yes, the BSP will intervene, but until when?

**tidus1203** · October 30th, 2008 10:10 AM

*JPDM

At the end of the day as mentioned by others, the Phil. government has no money to manipulate the markets. No matter how they want to control the markets, just like when the Peso was rising the BSP was also intervening by selling Pesos but it only smoothen volatility but it did not really stop the Peso from rising. At the end of the day it was still the market that said "Opps.. now that the global economy is tanking we should sell risky Peso and go back to USD" and then you have the Peso reverse and weaken. Kaya the markets is too powerful, no government can stop the markets.

**uls** · October 30th, 2008 11:00 AM

Well, BSP is continuously supporting the peso to prevent it to slide further...

nobody said the BSP wont intervene

actually, i already posted days ago that the BSP is selling dollars to defend the peso.

the question is how long the BSP can keep doing that.

---

the BSP better thank the Fed for cutting rates

humina konte ang dollar dahil sa rate cut

**Galactus** · October 30th, 2008 05:29 PM

Again, the selling of dollars is not the BSP's only weapon. As I said in my previous post, it can raise its lending rates, and increase the reserve requirement to restrict money supply, thus decreasing funds to be used in currency speculation. In this aspect, it doesn't matter whether the BSP has $30 or $300 billion to sell off, it can resort to other means to stop speculative activity. Years ago, I think the BSP under Paeng Buenaventura fired off a missive directed against OBU's which were the main players in forex market warning them of repercussions if they continue to engage in speculative trading. I'm not sure of the exact details though, but the culprits were foreign banks.

Does anybody here seriously think the BSP will let the peso slide to $1 = P60++? Given the country's debt (billions in dollar-denominated loans), any economist worth his salt knows it's not a good move to let market forces determine the peso's true worth (darn, the term "market forces" is beginning to sound like a cliche).

**tidus1203** · October 30th, 2008 06:34 PM

But if they restrict the supply of money the economy could tumble. Lending slows down and money circulation slows down. Its all a balancing act which still leads to the fact that government can't manipulate markets they can only smoothen the volatility.