(Good old days for the dollar! This was taken November 27, 2003. File photo from Agence France-Presse)

For the longest time, the dollar has been the darling currency of the world. In an earlier post, I asked if it was a doomed currency, but as a good friend pointed out, if it is really the end of the road for the greenback, why do its hiccups still affect world markets?

More and more, however, other currencies are starting to shine. So here’s a quick tip for overseas Filipino workers struggling with the weakening dollar: get paid in the local currency.

Of course, this will only work if you are not working or living in the United States. (Duh). Several of my friends, for example, work for Canadian companies. Instead of getting paid in the US dollar, which was the currency of choice for the longest time, they decided to get paid in the Canadian dollar. It proved to be a good plan as the US dollar slid continuously the whole year.

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For many Filipinos, stocks, bonds and mutual funds sound too complicated. Bank deposits are still the darlings of saving and “investing” and lately, they have been getting a facelift. Yesterday, they were marketed directly to Filipinos working overseas.

Long-term negotiable certificates of deposit, bankers call this product. Trust bankers and investment managers to come up with a mouthful of a name! MoneySense says if you want an easy way to remember, break it down per term.

LT is for long-term, N is for negotiable and CD is for certificate of deposit. In other words, it’s a hybrid product. See that wasn’t so hard, says MoneySense. Right on!

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Back in September, we had a peso forecasting game that elicited more or less 56 entries from MoneySmart readers and made many of us giddy with excitement .

It’s time to reveal the winner!

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From the looks of it, Gnoysa is likely to win the forex trading game with a P41.56 forecast for end of December!

The peso on Wednesday breached the P41 level, hitting P41.99 before closing at P42.03 against the dollar. When the forex market opened this morning, the peso was at P41.90 again and the weighted average as of 10.44 a.m. today was P41.887 to the dollar.

Both inflows from overseas Filipino workers sending money home for the holidays and investors taking positions in the stock market lifted the peso further. And because we all expect the money to continue to come in, this only means you gotta get ready to see the peso rising even more in the next weeks.

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(Some things you just can’t shake off like the rising peso and climbing oil prices. The sooner Filipinos accept that, the better. Photo from AFP)

Sometimes, the most effective solutions to complex problems are the simplest. Like transparency, for instance. One of the simplest ways to reduce corruption is to require government offices to regularly report audited figures on the unit cost of everything they spend public money on. As you all know, information is a currency recognized in all countries and it levels the playing field like nothing else can.

While doing research on fund transfers for an article I was writing, I was so frustrated to find so many banks holding on to remittance charges, breakdown of costs and delivery time as if these were state secrets. Some even said these were proprietary information. Duh.

The Bangko Sentral ng Pilipinas’ move to compel banks to make these data available to anyone is a good move, but I hope no one shoots me for asking, “What took so long?” I mean, no one had to revise a law or hire a rocket scientist for something as simple as a policy on transparency, right?

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Hot money, hot Pinoy seafarers (were you thinking of hot Pinoy hunks? Tsk tsk), hot business opportunities in medical tourism – everything’s hot today except the weather. We are expecting another typhoon…sigh. It’s always like that before or after my birthday. EVER since I was born 21 years ago. (Did you just do a double take?)

The Philippines attracted $274 million net “hot money” last October, the Philippine Daily Inquirer reported today. That’s quite a huge jump from $35.8 million in September, and totally deserves a blog post.

In this post,  I wrote that hot money refers to short-term investments by foreign investors in local stocks, bonds and money market instruments. While they influence the local financial market, we need to remember that they are very speculative and can leave our shores at the touch of a button. The long-term growth of our stock and bond markets, in fact, will depend on whether domestic investors (that’s you, me and our OFW friends and relatives abroad) will begin to invest in the domestic market. Policy-makers hope a wider base of domestic investors will not be as jumpy as foreigners.

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The Philippine Daily Inquirer’s top story in the business section today says “BOP surplus seen topping $7-B mark”.

Balance of payments (always with an S) is an economic jargon that simply refers to a record of all international transactions between one economy and the rest of the world in a particular period.

Doris Dumlao, in her article, further explains:

Any transaction which gives rise to a payment by a Philippine resident like importation or debt servicing is a deficit item in the BOP while any which gives rise to a receipt like borrowing, exporting or overseas Filipino worker remittance is a surplus item.

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We have talked about this often here in MoneySmarts: the pain suffered by OFWs who now can buy fewer pesos with their dollars.

As you all know, the peso broke into the 43-per-dollar level yesterday for the first time in even years. The exchange rate is now closer to the yearend forecasts of Richardson, Vero, Clipper, Reinan, Melan and the rest :-) (Check out the result of our peso forecast game here and the original challenge here)

We all know the peso will keep on climbing. This statement from the central bank, however, was very illuminating:

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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.

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The peso has been hugging the headlines lately since our little peso-dollar forecast game, so I thought I’d show how your fearless forecasts stacked up with institutional players in the foreign exchange market. 

Some financial investment analysts initially thought the equities, bonds and forex markets will go haywire over the ZTE hearings. What do you know, trading hardly skipped a beat! Stock analysts said the whole thing was just entertainment for them. Where are the tantrums, the excuses to sell, the overreactions and highly dramatic one liners that market players normally reserve for times like these? Is this a sign the local markets are finally maturing? I await with bated breath for more signs. At least, it eliminated volatility and made our guessing game easier.

We had 28 bloggers who gave their fearless forecast for the peso-dollar yearend exchange rates! Here they are:

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