Imported goods mainly being energy. And in the petrodollar system, demand for $ goes UP as energy prices increase. Add on top (perceptions) of Fed rate hikes and the USDX has strengthened 1.5% this year, despite many factors that suggest it should weaken (deficit spending / debts / asset bubbles)

Add to that the cost of oil which is bought in dollars so the Philippines has to sell pesos to buy dollars and is screwed when oil prices go up.

well explained ! thank you for clarifying that. So many people are attribuating that to inflation which I find crazy how uninformed some people might be. OP if you want the reason for the decline that's one of the main answer. Of course there are more variables but the main reason is the development of AI and the BPO industry being hit by it.

lol you’re clueless if you think inflation isn’t relevant here. I studied economics and finance and understand market. FX rates are ultimately about price levels and that is what moves exchange rates. You think the devaluation of the peso comes from AI and BPO? That’s not even close to what it is. That’s such a small part of economic activity in PH.

If you look at foreigner capital flows It is more than likely that there are better yields elsewhere and the Philippines also looks like a very unsafe bet with the corruption, lack of overall stability, and the draconian laws against foreign business. There will be a day that Myanmar or Laos is somehow more attractive than the Philippines. Turtles move faster than Philippines modernization.

Ultimately it’s about price levels and price levels will drive FX rates. There can be short term movements in FX rates due to various factors but long-term will be dictated by supply and demand based on relative price levels and the central bank will dictate policy based on all of this.

PH and US CPI, over the past 10-years, increased at an annual rate of 3.9% and 3.3% respectively, while the peso depreciated 2.6%\~ per year in the same time frame. Exchange rates have multiple factors and inflation is one. However, I'm still convinced that the weak demand for pesos and strong demand for dollars are the bigger drivers for the exchange rate.

Any prediction of the exchange rate around Christmas/New Year?

I don't forecast but economists surveyed by Bloomberg are looking at 61.0-63.1

We aren’t really buying dollars though. The BSP has more than $100B of dollar reserves and we have the means to replenish the reserves by means of OFW remittances and BPO revenue. The Peso is weakening simply because of the Dollar strengthening due to looming Fed interest rate hikes. These makes demand for the dollar in Forex markets climb up as hedge funds adjust their investment portfolios to acquire more dollars.

How will you replace it if your OFW’s start losing their jobs due to an economic recession/depression?

The dollar is not simply strengthening. In last 12 months: Dollar is +0.9% against EUR, +0% against GBP, +9.33% against PHP Even JPY that is going through a collapsing currency is +8%, it’s performing better than PHP

Yup. This is the key if you are a US Expat with either investments or income based on the US dollar. You're buying power is now better than it was at the beginning of the year. It's like you got a 6% raise.

Philippines inflation rate in July was 6.2%. So you’re treading water

They mean if you had $10k in Philippine Peso’s, you could only exchange it for $9410 now.

You didn't lose on purchasing power though. The 610k phillipnes pesos you have still buys 610k worth of goods in the Philippines. You'd lose only if you now try to convert back to USD. But you converted at the beginning of the year to presumably spend the money in the Philippines not for buying goods prices in USD.

Except, the goods you could have purchased at the start of the year for 610k now cost 670k or more because so much is imported and the costs to import goods are impacted by both the exchange rates and transport costs, which have been hit by fuel pricing. Unless you're only purchasing price controlled goods like rice, instant noodles and canned sardines.

You think it’s good for you because you don’t understand how economics works. Yeah, on paper, it looks like you’re doing better, but over time, because the Philippines imports a lot of things, especially oil, things will start to get more expensive and eventually hit the pockets of people living in the Philippines. Just look at diesel. Because the peso is down, you need more pesos to buy it, and those higher costs eventually get passed on to everyone. For example, in the Philippines, goods such as food and vegetables are mainly transported using diesel trucks, so higher diesel prices increase transportation costs, which can eventually lead to higher prices for consumers.

As an expat, if half of what i buy is imported, I'm still getting a deal on the other half. Last night, I took 7 people out to dinner here. Local place. $14. But filling up my truck i had to stop them at 6000p ($97). So, I'm riding my motorbike a lot more. So, you can mitigate costs somewhat too.

You’re not going to feel it right away, and I’m not saying you don’t have an advantage as a USD spender/expat, but it’s not as straightforward as “$1 = ₱62, so everything is good.” Let’s talk about the real impact here. You know that a lot of Filipinos are only making around ₱600–₱700 a day, and they’re the ones getting hit the hardest. For an expat to wish for the exchange rate to go to ₱65 per dollar shows a lack of empathy. Typical Westerners who just take advantage of people.