Do you like to ride the roller coaster? If you are going to live in a foreign country as an expat, even if you don’t like to ride the roller coaster, you have no choice. You will have to ride no matter what, assuming that your money comes from your home country.
Whether your income is from investments back home, a pension from your years or work, or other sources “back home” jump on the roller coaster and give it a ride!
I am talking, of course, about the exchange rate. If, for example, you live on your Social Security back in the States combines with something from your retirement account and/or a pension that your company pays you in retirement, hopefully, you will enjoy the roller coaster ride. Foreign exchange is just like riding a roller coaster.
Exchange rates change every day, even every minute! My favorite place to check the Foreign Exchange rate between the US Dollar and the Philippine Peso is at XE.
Right now, things are looking pretty good for us Americans, and expats from most other Western Countries. We are experiencing a favorable period of exchange rates.
The first time I ever came to the Philippines in 1990, the exchange rate was 19:1. For every US Dollar, you exchanged you got 19 Pesos. I thought that was pretty good.
Ten years later, in 2000, I moved to the Philippines and the exchange rate was 40:1. Wow, I could not believe how nice that was. During the months following our arrival to live in the Philippines, the rates just kept getting better and better. Only a few years down the road, the rate was 55:1. We were living a life of luxury! Well, maybe not luxury, but life was good, and there was never any worry about the rate falling.
Exchange Rates go both ways
But, in around 2006 or 2007 the rate had peaked out just over 56:1, and started falling, and it fell quickly! Before we knew it, the rate was 40:1 again. That means about a 30% drop in the value of the dollar in a short period of time! Think about it like this, if you earn a salary of $1,000 a week at your job and you went into work on Monday and they said: “Sorry, Charlie, but starting today your income is going to be $700 per week.” How would that affect you? Well, it would hurt.
The rate stayed around 40:1 for years after that. Just a few years ago, though, we started seeing a rise in the value of the dollar. Pretty quickly it went from 40:1 to 44:1 and hung there for a while. Since then it has continued to inch up. Last year, we finally breached the 50:1 mark again, and most expats were very happy!
This year, we have gotten fairly firmly above 51:1, and I read a report in a Philippine newspaper that the Philippine Government is expecting to see a 52:1 exchange rate in coming months.
Remember how Roller Coasters work
Remember, though, roller coasters go both up and down. Don’t get too used to the 50+ rates, things can turn around on a dime. Last time when we hit 56:1, I was riding high, and had no worries about the downhill part of the ride that was approaching. When we quickly were back at 40, though, it did hurt! We adjusted and recovered, though, but it was not easy.
This time, I intend to enjoy the upswing and be better prepared for the downswing.
What about you?