Over the past two years, the value of the dollar has really taken a dive here in the Philippines, and also around the world. It is something I have written about in the past, but I feel it’s time to re-visit the subject. Two years ago, a single US Dollar would purchase a little more than 56 Pesos. Today, you’re lucky to get 45 Pesos for that same dollar. That’s a loss of 20% in two years. For anybody living here and earning US Dollars, it’s a drop in value that is surely noticeable in their daily life.
Let’s say that you are retired here on a US Pension of $3,000. Two years ago, that pension was worth P168,000. Today, for the same pension you receive only $135,000. That’s a big difference! Of course, most of us Americans living here are lucky in that we can still live a good life. Our incomes are high enough to withstand the slide – for now. But, I have heard from a number of American friends and acquaintances that if the dollar continues it’s downward spiral they will have to reconsider their permanent stays here. The problem with that is, if you are earning such a small amount that you can’t afford to live in the Philippines, where can you afford to live? That’s something to be looked at!
The Administration of President Arroyo is really bragging that their reforms and programs have improved the economy a great deal, and the value of the Peso against the Dollar is an indication of that, or should I say a confirmation? However, I don’t buy that. The fact is that the Dollar has crashed against almost every currency in the world! The British Pound is now worth more than $2. The Euro is more than $1.35. So, it is not a matter of the Peso gaining strength worldwide, it’s more a matter of the US Dollar losing strength worldwide, including against the Peso. It makes good spin for GMA to claim responsibility for the Peso strength against the dollar, but that’s what it is – spin.
Funny thing is that with the dollar losing so much value, that should mean that goods from the USA are getting cheaper, the Peso is worth so much more after all. However, when you go to the grocery store and look at US products, they are getting more and more expensive, not getting cheaper as they should. At first I thought that the prices of imported goods would fall in time, it just took things some extra time to even out. But, we have been experiencing this Dollar decline for about 2 years now, and prices have had time to flush out their real values. I suspect that some people are just making some extra profits on the exchange imbalance.
What do you think? Does the slipping dollar have any impact on your plans to live in the Philippines? If you are already living here, do you think there will ever be a time when you will be financially forced to go back to the States?