Mighty dollar
As a result, the scramble for dollars is making the dollar even more expensive to sell, buy, and borrow.
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As a result, the scramble for dollars is making the dollar even more expensive to sell, buy, and borrow.
Truth to tell, I don't have American dollars nor have the means to earn dollars nor a bevy of relatives living or working abroad generous enough to send me, now and then, valuable greenbacks.
Such are my circumstances that if anyone in my educated retiree circles dishes out well-meaning advice to "Hold on to your dollars!" in order to survive a trying economic climate, it leaves me cold.
Managing only a stupid silence, most of time I'm hoping the chats turn more on the impenetrable subject of how to survive the high prices of immoral inflation.
I can't really blame my peers. Probably moderately sophisticated about finances, they're savvy enough to have investment strategies to offset the dire effects of inflation, maybe even to make money from it.
But what about the poor and the soon to be poor? Their only available strategy left is to invest what little money they have in food and shelter. Inflation is brutal on the poor.
Still, much as I want serious talk on licking inflation, everyone only wants talk about how the peso is on the ropes against the almighty American dollar.
But, to my chagrin, every time someone with the necessary economics chops has something to say on the peso's slide, I feel like a dolt.
Not only because it's all technical jargon, but mostly because they presume we're informed about the real causes of the peso's dive against the dollar.
Well, we aren't.
So, here I am, a half-decent political reporter making a go at becoming an amateur economist, trying to understand why the peso is diving into uncharted depths before even thinking of the disastrous effects the peso's dive has on our general well-being.
As to how bad the peso will go, knowledgeable House Ways and Means chairperson Joey Salceda predicts the peso will tank all the way to P65 to P68 to the dollar, after falling to an all-time low of P58.49 last 22 September.
It's a prediction which sets off an alarm, much like the piercing text alerts disaster authorities sent last Sunday as super typhoon "Karding" barreled toward Luzon.
Now, in my amateur forays, I soon found out inflation has a lot to do on why the peso is doing badly against the dollar and will go on doing badly in the coming days. Why?
Fortunately, Salceda has the answer.
It's because he expects the US Federal Reserve Bank (the US Central Bank) won't be backing away anytime soon from raising US interest rates even more as it fights off inflation wracking their country.
So, it's American inflation which is sinking the peso. We're at the mercy of American economic malaise without many of us knowing exactly why.
But why are high American interest rates so injurious to the peso?
The Economist magazine, the go-to newsmagazine of capitalism, neatly explains the dollar's present might against the peso and a host of other battered currencies like the European Euro or the Japanese Yen.
"What is driving it (the dollar's might)? Much of the recent rise reflects differences in monetary policy," says the Economist. "At the turn of the year, the Federal Reserve became more determined to tackle inflation. A series of interest rate increases since then, with more expected, has turned the dollar into a high yielding currency."
Why? "Lofty interest rates are a draw to global capital, which in turned pushed up the dollar," says the Economist.
In short, anyone with tons of money is dumping their local currencies, since having more dollars now means one makes tons of even more money.
As a result, the scramble for dollars is making the dollar even more expensive to sell, buy, and borrow.
Can't really stop that from happening since that's how voracious, greedy globalized Finance Capitalism goes, it seems.
Faced with such forceful outside forces, it only means the peso's depreciation isn't really our fault.
Which in turn means, as Salceda says, "we can't do much to protect the peso," since we're small fry in a world of whales and sharks.
Ending up helpless in stemming the peso's deep dive then is something very serious.
So much so, all of us forthwith must fortify ourselves even if we don't happen to have dollars in our pockets.
Email: nevqjr@yahoo.com.ph
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