Analysis of Peso Exchange Rate Outlook on the Occasion of the Exchange Rate's Emergence

No source. This is just a compilation from various places.

Currently, the exchange rate of the peso to the dollar is 61.8.

When I went to the Philippines in February of this year, I exchanged money at 58.2, so the value of the peso has depreciated since then.

Damn, I should have gone now instead of February...

Regretting it is useless as it's already in the past. More importantly, predicting the future of the peso is crucial.

My outlook for the peso's value is bleak, with a long-term decline.

The reason is the continuous decrease in ODA (Official Development Assistance). While it's a grand term, it's essentially like charity from the rich to the poor. It's a looser form of aid than loans, used by developed countries to prove their obligations in the international community and secure their voice.

By 2025, it will decrease by a whopping 20% to $170 billion. It also decreased in 2024. The causes are likely economic uncertainty, Trump, and the war in Ukraine.

The quality of ODA is also deteriorating, with increased allocations for essential support to Ukraine and the Middle East.

The Philippines is, without a doubt, a recipient country of ODA. This means the "free money" is dwindling.

In fact, the number of countries that have successfully transitioned from receiving ODA to giving it can be counted on one hand, like South Korea and Taiwan. This shows how difficult it is.

And then there's the situation within the Philippines.

The Philippines has always lacked industrial facilities and infrastructure. Despite a persistent and growing trade deficit, the country has continuously borrowed money from overseas to fund various construction projects. Fortunately, the trade deficit slightly decreased last year, but it is expected to increase again this year.

President Bongbong Marcos is focusing on building social infrastructure, such as roads, ports, and bridges, and most of the materials are imported. The largest construction boom in Philippine history is underway across the country.
There are dozens of large-scale projects, and they cannot be completed overnight, so a depreciation of the peso seems almost certain.

Furthermore, in Manila, numerous condominiums the size of Tower Palace are being built. Almost all materials are imported.

If you are considering purchasing a condo or something similar, it might be wise to wait a little longer.

Finally, let's look at exports. Lacking the funds and technology to produce high-value-added products, the main exports are remittances from overseas workers and agricultural products. Unfortunately, fertilizer prices are continuously rising, and climate change will increase the volatility of plantation crop exports. Fortunately, plantation crop exports are currently increasing. However, it is clearly a long-term risk factor. The remittance sector is the backbone of the Philippines' foreign exchange earnings, but it is currently a double-edged sword. Northern European countries, after experiencing severe consequences from accepting people from developing countries, and Western European countries observing this, are rapidly strengthening their immigration policies. Trump even made it a campaign promise... However, in reality, due to aging populations and low birth rates, it's impossible not to accept people from developing countries, as their national functions are on the verge of collapse. We need to watch this situation more closely.

What's interesting is that the peso generally strengthens from late October to December. This is likely because overseas workers, who work extremely hard, send home significantly more money during the year-end holidays. Then, it gradually weakens again, peaking around August-September.