Almost everything in life is changing constantly, that shouldn’t be a big surprise. Very few things remain the same over the long term. One place where we American expats are seeing a lot of change lately is in the value of the US Dollar. The US Dollar, in the past few weeks, has been losing value against almost every world currency, and that includes the Peso.
I can remember the years when I was living in the States. We would hear on the news that the dollar was losing value, or was getting stronger against different world currencies. It would be on the news, and people would talk about it a bit – a “strong dollar” or a “weak dollar” – but in the end, if you live in the USA it doesn’t not have an immediate or huge affect on your life. Oh yes, if the Dollar sustains a long period of weakness, then you will start to see inflation in prices, overseas vacations will be more expensive, etc. If the Dollar has a sustained period of strength then you will find imported items cheaper, when you go overseas your dollar will stretch further, etc.
When you are an expat, though, living abroad, if your primary income remains in Dollars, when the dollar loses strength the affect is immediate. When the dollar goes down in value, you feel the squeeze that same day. It doesn’t take time for the affect to reach you.
In the past few weeks, the dollar has been taking a dive. It all started out when the dollar was actually showing strength. After a prolonged period of the dollar staying at a Peso value of roughtly 47.8 to 48.0, in a matter of just a couple of days, the dollar was suddenly nearing 49. But, just a couple of days later, the dollar dropped like a rock!
This past week, we actually had one day when during intra-day trading, the dollar breached the 46 level and was trading at 45.99. What a drop! As it is now, the Dollar/Peso rate is hanging around 46.5 or so.
All during this past few months, we have continually heard that the Dollar will by 52 Pesos or so by year’s end. Now, they are talking about the Dollar going below 45 by year’s end. Somehow, I feel the days of a 40:1 Dollar coming back – it wasn’t very long ago when we American expats were facing that value. 48 to 49 Pesos to a dollar has been a nice recovery. I’ve been hoping to see 50, and would have been happy with the dollar at 50 Pesos, but it is looking like that is not meant to be, at least not soon.
The thing is, the dollar is losing value all over the world. With US deficit spending totally out of control, it will likely continue to lose value in the foreseeable future too. I don’t think it is unreasonable to think that we’ll be seeing an exchange rate of 40:1 again. US spending is out of control, and that damages the value of the dollar.
So, here we are, back in the 45 to 46.5 realm again. There are no signs that the US Government has any intention of taking actions to retain (or regain) dollar strength. I think we are in for another round of expat belt tightening ahead. I find myself considering just pegging my pricing in Pesos and moving on with that. I mean, after all, I live in the Philippines, why should I continue to value my work in Dollars, when that is not the currency I am living on. It is something I will be considering, and making a decision on in the coming months, as I observe what the dollar is going to do.
What about you? If you are an expat already, do you still earn or receive dollar income? If you are hoping to become an expat, do you have a plan for dollar decline? Will you earn in Pesos or Dollars?