Movements in currency markets — whether of the peso versus the dollar, dollar versus the euro, yen, or other currencies — have tremendous impact in our lives. From debt servicing to import costs and, closer to home, the value of 8 million Filipino workers’ earnings as well as other dollar earners like call centers. As a result, millions of eyes follow each little blip and hiccup in the forex markets every day.
Much as financial journalists would like to meet the daily challenge of making each article understandable to grade six students, sometimes that task becomes extremely difficult due to limitations of time, space and, well, ability. As a result, reading currency news can be so confusing.
So here are small tips for beginners who want to understand forex articles, and more to the point, turn this understanding to better money management.
Words like weaker, lower, softer,and depreciated indicates you will be getting more for every dollar, while stronger, higher, firmer, appreciated should make dollar earners quite disappointed.
When it comes to verbs, you have to give journalists a little bit of leeway. I mean, imagine how the article will read if you can’t use colorful verbs to describe what happens to currencies during trading hours. A falling peso means the peso’s value drops against the dollar. When that happens, you need more pesos to buy one dollar, but then your dollar can buy more pesos. Common words that replace fell are dropped, tumbled, went on a downward trend, things that make both OFWs and exporters happy.
Words like rose, lifted, edged up, recovered lost gains, improved, on an upward trend, eased, however, will do quite the opposite.
Some other phrases I found on recent news articles on the exchange rate:
The peso is expected to extend its gains against the dollar.
Interpretation: Get ready to send more dollars in the coming weeks because the amount you normally remit will not be enough to pay rent and buy groceries.
The euro is expected to outperform the dollar.
Interpretation: Buy more euros.
Market is mixed.
Interpretation: Currency brokers can’t make up their minds.
Honestly, players in financial markets surprise me often with how creative they can be with language. Seriously. “Unwinding of excessive short dollar positions?” A friend’s reaction: Ano raw? Right interpretation: Currency dealers are buying dollars again. Short on the dollar means they have lessened their dollar hoard and invested in other currencies. (Rolling eyeballs here…) Journalists can be so full of jargon, sometimes.
If you want to know more about how to manage foreign exchange risks, here are some of my previous posts:
Is the dollar a doomed currency?
GUEST POST: Cool tool for managing dollar earnings
4 warnings signs you’ve missed the forex lessons from the Asian crisis
Silver lining for the stronger peso
Finally, can you remember when you last saw a P2-bill?
September 22nd, 2008 at 1:44 pm
totoo, it’s so hard to understand forex news or even business news for that matter.
i wonder why journalist do that because the ultimate goal in writing or reporting news is for the readers/listeners to understand. But I do understand their need for creative outlets. ^^
Salve, I think the links you gave are broken. I couldn’t access any of it.
inquirerbloggers.net cannot be found.
September 21st, 2008 at 7:17 pm
“Unwinding of excessive short dollar positions?”
It means a lot of investors were previously ’shorting’ the US dollar betting that it’s going to get weaker in the near term, but were surprised of its strength, and now they have to ‘cover their shorts’; i.e., thus they have to buy dollars.
Quite different from what you wrote. Yes?
October 25th, 2007 at 7:20 pm
Nice to hear that the Government has taken wonderful steps about the movement in currency market and the Forex market are
based upon the simple law of supply and demand. When there is a demand for a particular currency its price will rise and when there is an excessive supply of a currency its price will fall.
October 11th, 2007 at 4:05 pm
The Government always finding a way where ofw can invest. But the question does the Government serious? Or just to show they are concerned for the ofw investment. Really if they are serious they can offer the Government dollar bond in which the dollar of ofw can gain more interests compare with UITF and other dollar investment. Since ofw remitting thier dollar back home no need to offer same as what the banks doing giving interest 1-3.5% rather than 5% or more in the government dollar bond. Banks and Philippine Government are cheating ofw’s this is the worst word I can say.
October 8th, 2007 at 10:09 am
[...] Money Smarts : The crazy language of forex news articles By Joey Alarilla Feedbacks on this entry via RSS 2.0 Please leave a Comment or discuss via Trackback! Comments Please Leave a Comment! [...]