Where is the Peso headed?

#AskMarvin

“Hi Marvin, I ‘m scared about what’s happening in the Philippines right now. I was planning to go home in 4 years but all news is making me a bit tense. I just want to know how far can the Peso slide? Thank you.

Calvin, 48, Dubai, UAE

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Hi Calvin,

First of all, don’t be scared. Fear causes investors to be irrational on their decisions. What we want is for us to make sound investment moves based on our trading and financial plan.

I normally post stock charts but because of the numerous questions I got about the USD vs the PHP and its relevance to what’s happening in today’s market, here’s a technical snapshot of what’s happening to the PHP.

1. As of this writing, the USD is bullish against the PHP, all technical indicators at this point, point toward the USD appreciating even further.

2. Something significant happened after it broke the 48 Peso level. This range has was never broken in i think more than 7 years already. (Let me double check on how long). This means that the USD is on a breakout.

3. Should this breakout progress, the USD may go as high over the short term to 50. Which is the next resistance level. Should 50 be broken, 52-53 may be the next resistance. However, I think should things escalate further, the BSP will also step in to protect the PHP.

4. Should 48 not hold in the next few days, there is a possibility that the PHP could appreciate back to 47.5, specially if the BSP intervenes.

As the USD appreciates, this places a strain on the products that we buy abroad since the Philippines is a nation that imports more products than it exports. This could also lead to prices of normal goods and services to go up and may increase inflation. On the flip side, it’s a party for OFWs, as their remittances will go a longer way this time. The BPOs will also earn more from this and also our very small export industry. Hoping that the consumption spending from all of this can offset the current depreciation from the PHP.

Will update you again when we see a reversal in the charts or if there is another significant move. I am fan of the Philippines. I hope that all this noise clears out so we can let our value just stand out. But as of this point this is how the market is reacting and we just move and make our strategy based on what is presented before us.

Let me end with this, Psalm 91: 5-7 (NLT)

“Do not be afraid of the terrors of the night, nor the arrow that flies in the day. Do not dread the disease that stalks in darkness, nor the disaster that strikes at midday. Though a thousand fall at your side, though ten thousand are dying around you, these evils will not touch you.”

Hope this helps you.

Marvin

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