It was about 2 weeks ago that I had my finger poised over the screen capture button, ready to catch the piso as it crossed up into 46 territory. Instead, right as the piso's exchange rate with the dollar climbed toward 45.95, it suddenly turned and ran screaming back down... down... down.As best as I can determine, this turnaround was brought about by two things (though why, I could not say): The central bank of the Philippines warning of ongoing double-digit inflation rates for the remainder of 2008, and a 70 billion piso ($1.6B) bond offering coupled with an interest rate hike.
Of course, a bond issue is a temporary thing, and I'm not to sure what effect raising interest rates has on inflation (or — to be honest — what effect inflation has on exchange rates), but it doesn't sound like something that will pari passu strengthen the value of the piso against the dollar for any length of time.
5 comments:
Jil you are a bit simple
If inflation is rising, interest rates will rise to counteract this
Why would anyone invest in USD when they get a poxy 2.5%
While you can get 7.75% in the peso
oh dear you're scrwed
Guess you will be running back to mummy in new york when the peso is 30
It goes without saying that interest rates are rising to keep pace with inflation. That was the assumed minor premise of the syllogism about the correlation between the two. The question is what changes in interest rates have on inflation. You switched my cause and effect around.
And... When the peso is 75 to the dollar, I'll be making 375,000 pisos per month without working any harder than I am now. Can't wait.
haha i beat u to it
u loose again
Yes Owen... you seem to be a bit simple too, eh? Making up-means-down mistakes. Just because you correct them before I post a comment on them doesn't make you any less of a "looser"... or any better at spelling.
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