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If you’re an American expat living in the Philippines like I am, along with thousands of others, you probably keep a close eye on the Philippine Peso exchange rate versus the United States Dollar. This is a topic that has explored before on PhilippinesPlus.com, and a popular topic on other American expat sites. With some recent comments (thanks, Gary!) that alerted me to some recent dire predictions of an exchange rate of PHP 37.50 to $1  in 2011 and PHP 35.50 in 2012 from HSBC (Hong Kong and Shanghai Banking Corp) made this past  Wednesday. The bank forecast a stronger Philippine peso this year and next as a  “result of the Philippine Central Bank’s strong support for the country’s currency to ease the impact of inflation caused by soaring oil and food prices.” That according to a recent  report in All Headline News.

However, the same report states that last week the Philippine Central Bank also revised its forecast to an average exchange rate of PHP 42 to 45 to 1 USD from a previous range of PHP 45 to 47, much higher than the HSBC forecast.  In 2010, the average exchange rate was PHP 45.12.

The weakening of the US dollar versus the Philippine Peso has adversely impacted our budget at “The Compound.” When we arrived in the Philippines in July 2009, the exchange rate was 48.01. So for a exchange of $1,000 USD from July 2009 versus exchange done in February 2011, when our exchange rate was 43.74, that is  a loss of  about 97 USD. That is a big chunk of income to lose when you’re already on a fixed income as we are.  This past Friday  the rate stood at 43.37, and has been on a downward trend.

Hopefully, the actual exchange will be more in line with what the Philippine Central Bank is predicting. Frankly, with the ongoing investigations into the corrupt practices of the Philippine military,  along with other widespread corruption in the Philippine government, I’m surprised the peso is as strong as it is.

However,  with the possibility that Taiwan, the third largest employer of OFWs (Overseas Filipino Workers) threatening the jobs of almost 80,000 Filipino workers due to a diplomatic row the Taiwanese government is having with the Philippine government, this would drastically cut the amount of  OFW taxes coming in  to the Philippines government  and would sharply curtail remittances coming in to the country. I would suspect that such a scenario would have a negative impact on the peso and the economy.

So if you’re planning to retire to the Philippines, don’t let the wild fluctuations you read about concerning the PHP vs. the USD concern you too much.  We’ve managed to do just fine despite the reduction in the exchange rate, and have made budget cuts where we could. One money saving idea we have implemented for the past several months is using a jeepney in Iloilo instead of cabs. 

A jeepney ride across town costs P7.50 (17 cents.) A taxi ride the same distance can now run about P80 (about 1.84 US Dollars.) That’s a savings of $3.34 each trip to Iloilo since we used to go back and forth always using the cabs. Figure about four trips a month to the city now saves us $13.36. It’s not much but it adds up.

We’re also going to be opening up a bank account soon in the Philippines which will mean we’ll save money on our ATM fees. BPI (Bank of the Philippine Islands) recently started charging an additional P200 (4.61 USD) for each withdrawal on top of other bank fees, so that will save us a substantial amount each month, also.  In the new BPI fees alone it will save us around 23 USD a month.  So there are ways to economize and work around the peso to dollar fluctuations. We’re in it for the long haul, and plan to stay living in the Philippines, where it is still much cheaper, we find, than living in the United States.

41 thoughts on “Wide Range of Predictions for Philippine Peso vs. USD Exchange Rate

  1. Dave

    hopefully the exchange rate will stay more consistently high in the future. The government is supposedly working on a fix for Social Security. Now our new govenor here in Florida wants to mess with Florida State Retirement System, could delay my move to the Philippines. He already pissed off the legislature and a bunch of other people by cancelling a federally funded high speed rail project for Tampa-Orlando area, hoping they will not pass his changes for the retirement system. Thanks so much for the info.

    1. Dave…Your right..but I think most states retirement funds are gone and were probably taken care of the same way the SS fund was taken care of…there could be a revolution here for sure…..and if there ever is…it will make what you see on the news…..look like a pick-nic. It will not be pretty….very ugly.

  2. I think you are only looking at the RP central bank stance. Most economist also predict that the US dollar will depareciate against most currencies due to the large amount of borrowings the US has inured to finance the wars and stimulus packages, this will depreciate the dollar more than what the rp govt can control.

  3. If the peso v dollar goes from 43 to 35, I might have to fork out more dollars to my aunt. Here’s hoping that the US economy will continue to rebound and we (US government) stop spending more money than what we take in.

    EJ
    Houston, Texas

  4. is the peso exchage rate going bad…………because the u.s. dollar is loosing value…………or because the philippine economy is getting stronger……….if wages go up in philippines …….would that put the exchange rate in even worse shape…..

  5. Well Dave…Hopefully the Peso will surprize all that are concerned with it and go over 50 pesos to a dollar…..Hows that for dreaming? Be nice for you ex pats there..

    1. Good for you Dave…..that is about all one can do is take with a grain of salt and try and live smart and at least get some of the basic foods stuff stashed a way..I think when it comes right down to it…most of us can give up a lot, but be hard not to have any thing to eat….

  6. I for got to say…..I belive the dollar is going south here some time this year….I mean..how can it stay good with as many as they have been printing…I look for inflation to kick in…citys are going broke..states are going broke..some state goverments are trying to take some of the freebies from their workers and the workers are rebelling…there so spoiled and rotten…and never have felt sorry for any state of fed worker that gets all those un earned freebies or entittlements for being on the state or fed pay roll and the rest of us tax payers paying to help them have all those free benfits..but us average workers or people…only benfits we have are what we can make for our selfs….so gonna be intersting..here in the states.

  7. the only way the USA can repay its debt is to print money,,one of the last resorts for a dying empire. The middle east unrest if it goes the wrong way could be a very bad thing for the US economy…think of what economic impact $5 a gal. of gas would do?! Inflation is a given..its not if but when, the only unknown is how bad? Best case i think will be equvilent to Japans lost decade, worst case hyper inflation and a worthless green back. But hey beers cold…Cheers !!!

  8. Yes Brian…the beer is still cold and most can still afford to buy it for now…and your probably right…$5.00 gas is comming…not sure when but its comming…I quess one pridictor of how much inflation will be is just watch how much a Big Mac costs over time or maybe a $5.00 Dominos pizza will be $10.00 one of these days…with a pinch of cheeze…and a soggy crust because power will be out of site in price…but hey..maybe Dominos can go green and get a grant and use a solar oven…….

  9. Here is my two cents worths and that is all I have to give…two cents. Inflation here in the Philippines is way out of control and the economy here isn’t getting stronger, only weaker. It is a lose lose for expats. Meriam went to the wet market this past week and just about went into shock looking at the prices of food. How do the poor people do it? She made a huge pot of chili and gave some to a friend. He was happy to get it. They didn’t have anything to eat that night. He stopped shopping at the wet market. Not enough money.

  10. Agreed, this will make live hard for the fixed income folks. I’m sure glad I was able to get a job in RP that pays me in Peso. I am feeling like I got off a sinking ship when I left the US. I know I don’t plan to move back any time soon.

    1. Yes, I’m an IT manager leading a team of database and report developers at Deutsche Bank in Fort Bonifacio. If you’re interested in my background, have a look at http://mikestankavich.com. Dave Starr and I kicked around the idea of doing an ebook about what it takes to find an expat job here, but we were both busy at the time and haven’t had a chance to follow up since.

  11. I just read on yahoo news that in 2050 there will be 7 billion people!, and no way ther planet can feed that many people.That is in about 40 more years and a big share of us commenting on here will not be here, but a lot of the grandkids will be. Kinda sad what a mess things will be by then if all ready not a mess…Sounds like a lot of countries will need to go to the no kids policy…or maybe the catholic church has a plan to take care of the big mess comming.They are one big stubbling block with their polices on birth control along with a few other polices…..

    1. Hi Dan, The 7 billion mark will be hit by the end of this year. Growing enough food isn’t the problem. Getting the food on their table is. Somehow someone makes sure they don’t get it. Earth can support 9 billion people but after that we need to change the way we do things. I have also seen that humans only have about 200 more years left before we are wiped out. After that who knows what animal will take over but humans put a gun to their head and have pulled the trigger. To much oil and even if we quit using oil or coal today it doesn’t matter. It is just too late, events cannot be stopped now.

      Just my two cents worth.

      1. I really like the “Old Catholic” church. Had one in back in Michigan that I went to a few times. The church in Rome has lost it’s way. The Old Catholic church still holds on to good values. I think there are a few here in the Philippines.

  12. The peso is strong but there is no way that this economy can be sustained if it hits 35 for a long term.
    1. Foreign investors lose their edge. 30% of this economy is driven by foreign investment. 600,000 jobs in the BPO sector alone. There is no way that these companies will stay. There are far too many options, like back to India, or China, Soutn Africa.
    2. 35% of this economy is driven by OFW remittances, which will need to increase in value. All of a sudden the caregiver living in Dallas who sends home a remittance to her family in the province of $500/month has to increase her Remittance to $650/month just to keep the value at 22,000pesos. AND given the current global economy where these nurses and caregivers live, they cannot afford to increase their remittances.. so the family will just have to suck up the loss of 5000pesos just because the strength of the peso.

    Some say that they like to drive the peso up every now and then, and pay off a lump sum of their debt when the currency is strong. Some say its the true value…
    All I know is that when I stepped off the plane in early 2005 and I saw the exchange rate of 56.85, I couldn’t have been any happier…

    I say bring back those days… help increase foreign investment, increase the value of overseas remittances, increase tourism dollars, and increase my standard of living!! 😉

  13. I will be going to the philipines soon for the first time from the US. I dont know if this is a dumb question, bit is 43 PHP a lot? What is the average standard of living there USD? Any advise could help

    1. Like Dave says it depends on where you live and whether you’re willing to live like the natives or want to import a US lifestyle. I have an expat job so I tend more toward the latter. I end up spending pretty much the same as I spent in the US on living expenses. But that’s OK for me, as I just wanted to be in a different place doing something different.

      1. I’m sure you like it here.. it’s really a wonderful place… the air and atmosphere here almost energize my body not like anything it is back in the US.

  14. 35 to 1 dollar or thereabouts (being “predicted” by HSBC, Barclays, et al) is dreamland! Net, Net, RP Central Bank is living on borrowings (eversince increasing further)and the Phil economy is basically a semi-bankrupt economy afloat only because of remittances from overseas filipinos, PERIOD! Gimme a break, the RP Central Bank cannot defend the peso by selling its dollar holdings or reserves. With current political situations in Middle East Oil price is going to stay HIGH and inflation cannot be artificially restrained for long. To quote to the banks:”..I envy your ability to substitute optimism for REALITY..” 50 to a dollar is not at all farfetched in the near future after the euphoria of the new administration’s bright imaginings.

  15. I can’t predict the future. I will say I don’t know how long it can keep going down (peso) without major companies getting out as well as foreigners, ones who are here and have had their standards drop too much. What about all the tourists and prospective retirees who pass on coming here because of less value. Wildly fluctuating currency will not attract anyone, stability is the key, at whatever exchange rate. I used to spend a lot more in my local area and help out my friends and family but now I am keeping spending to a minimum, I am probably not the only one either. I think the RP government is shooting themselves in the foot and hurting the country in the process.

  16. I am also on a fixed income (military retirement). Wen we moved here in Jan 2002 the exchange rate was 57 to $1. Now it’s 43 to $1. That’s quite a drop.
    Hopefully it will stabalise out at around 50 to $1 by the end of the year.

    Anyway whatever it does, we are here for the duration. They have had a payfreeze with zero cost of living allowance for the past 2 years and this year we got a whopping 1% increase. Well as long as the US Government does not collapse we will get paid. Now soso secuity is anyones guess and it’s 12 more years away for me.

    As Dave pointed out, by American standars I am poor making a whopping $4k over the poverty line a year. But with the house paid off and the SUV we are still doing allright. Definately much better off then we were in the states with both of us working full time.

    Anyway when you make less, you spend less. As long as there is food on the table and the lights are on and I can have some beer a couple times a week I’ll be ok.

    Paul in Iloilo

  17. Lives in the Philippines are difficult,they are trying to do everything just to find money for food.For the OFW its really a favor if the Dollar is getting stronger but, the effect to those poor one ,cause everything are getting high, they cannot afford to buy even for their foods,..and if the Peso is stronger, the remittances of the OFW are getting slow and which can affect the economy, Its difficult..The Government should do something on it, and see to it that everything will be fair,or try to make the peso stronger and ask all the OFW to go back in their own place and work in their own country instead using their talents in different countries., Philippines are rich in natural resources if there is no corrupting officials,which is the main cause of the poverty.

  18. im filipino businessman here in the Philippines. but i take advantage to buy a USD when is low now because i know the dollar is going up up up. vs Philippine peso. the economy of the Philippines is only defend in OFW’s abroad. because it is 60% over all share in the economy to maintain the Philippine stable. with out the remittance from abroad the Philippine is fallen. (Philippine is only manage buy richest family) owned the media company electric company etc..
    they only manipulated the currency for there own family.

  19. your welcome. im just speak for my future. Filipino is no nationalism. and naturally crab mentally so the country is no future to become first world country or even second. latest update is number one worst airport in the world and number one worst country to do business with. and high electric bill water etc. investor not want to take risk with the Philippines.. im sure after a year’s another moron people power in edsa. and our buck is going 1 to 50 to 56. per dollar. again.

  20. @ Corman i live in in the late us military base here in subic or so called SBMA there is so many expat and retired us army here. don’t worry about the cost of living poor Filipino can live for only 120$ a moth. if want your cost of living is 500$ up a moth you are rich here 🙂 good luck man!

  21. every moth of December and June the dollar is low. because of remittance to buy gift for Christmas and moth of June OFW send dollar for there high school and college. because the law of supply and demand of dollar in the Philippines. more dollar low exchange rate low dollar higher exchange rate. 🙂 just timing for the rate and the month

  22. hi. Dave i’m planing to go in Vietnam. what do you think about the cost of living there? do you think it’s more cheap than Philippine? any advice please. 🙂

  23. With dropping value of dollar, creation of fantasy money, high inflation in 2013 and expect 20 peso to dollar by 2014. It will be better in Philippines as US will be a very poor nation soon. Drastic cost cutting in US is needed. Doing away with most Federal programs. The money needs to get to producers not blood sucking tax consumers.

  24. maria is going to chicago in 3 weeks to get her philippine passport renewed. i’m going to get my american passport soon. watch these blood suckers having me on a no fly list. house is going up for sale. don’t kid yourselves….the american dollar is dead….the sheeple just can’t accept the fact yet. do you americas have any plans for that day? no pension, what then?
    i’m heading for daves area, the dolar was worth 40 pesos in 1989 whe i married her. i’ll be looking him up, dave sounds like a good dude to me.

    1. Hi Dave, I have been reading your comments and yeap. I am trying to look up my family’s future specially my Son’s for College and that..The dollar it’s been around 42 for a while..I am a little concern about the retirement ss I am far away that yet ..what I was looking after is to have some kind of retirement plan in The Philippines for my future..I don’t know but I really would like to hear a little bit more..my Wife is Philippina and I live in Usa so basically we depend in both economies like I was reading somewhere else..well thanks Dave..BDW..its good to avoid taxi drivers…jeje

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