Finals Reaction Paper on "Peso slightly up as traders anticipate local currency to appreciate"

Peso slightly up as traders anticipate local currency to appreciate 

By Michelle Remo
Philippine Daily Inquirer
First Posted 18:16:00 05/18/2011

Filed Under: Foreign Exchange Markets, Economy and Business and Finance

MANILA, Philippines—The peso inched up on Wednesday as some investors believed that Asian economies would be performing well despite challenges in the external environment, traders said.

Traders also said some investors took advantage of the recent depreciation of the peso by buying the local currency and peso-denominated securities as they were anticipating appreciation in the weeks or months head.

The local currency closed at 43.23 against the USdollar on Wednesday, up by 5.5 centavos from the previous day's finish of 43.285:$1.

Intraday high hit 43.17:$1, while intraday low settled at 43.24:$1. Volume of trade amounted to $579 million from $748.8 million previously.

Traders said the debt crisis in the Euro zone has been causing some investors to be jittery, although the general outlook of investors for Asian markets has remained positive so that projections of the year still point to a peso that is stronger than its value in 2010.

In this situation, the determinant of demand, expectations, is in action. At the same time, this is a macroeconomic issue encompassing all nations and I believe considering every circumstance is important. This type of trend might just be a recurrence of a previous trend but economic fluctuations are really unpredictable sometimes. Every decision we make, even beyond the realm of money-spending or money-earning, are to be given enough attention. Our global community has become increasingly interconnected as we flourished in technology giving us more convenient ways to communicate with each other. Because of this our economy doesn't remain only national. We need to make wise choices that will guarantee us of a benefit and rid us of irreversible losses.

Before, I never really treated these events as a big deal although I am one of the many Filipinos who have family sending money from overseas. As time went by, I began to wonder how an increase or a decrease in PhP-USD exchange rate affects me and my family and my country as a whole, especially now that we are all trying to recover from decades of poverty. A depreciation of the Philippine Peso increases the remittance we receive from OFW's. At first, it gladdened me since the dollars we receive from our mom has a high Peso value. However, not all of us have family OFW's. They're really common nowadays. However, we are not entirely dependent on our OFW's. We have our industries we can give ample time and focus on. These industries uphold more our nationalism, our culture, our identity as Filipinos, and our pride as a people.

It is, in fact, good news that $1 is only somewhere around PhP42-43 compared to PhP55-56 six years ago. We may not be as globally competitive right now but I'm very hopeful that we'll make progress. I anticipate Filipinos patronizing local products. I am hopeful that one day the quality of these products will improve. I'll be even grateful when this is because of an improved employment system when there's a low rate of under- or, as my ex-teacher taught us, fun-employment and there are laborer-friendly working conditions. To add, I hope more innovations would be given patent for reproduction so as to make us less dependent on foreign goods.