Tuesday, March 28, 2006

35 to 40 pesos to the dollar

Let me quote a part of my March 20 post:

In my earlier post I predicted a 35 to 40 pesos to the dollar rate by end of 2006. This is due to various reasons, primarily because the dollars will weaken due to George poor management of the US economy, and because of GMA's good fiscal approach to the country's economy. Well, this situation will probably translate to a higher purchasing power to the general populace, alleviating poverty in masse to our people. Prices of commodities with imported content will cheapen, including gasoline; theoretically, diba?

Am I still, predicting the same range of exchange rate by end of 2006? Well..yes, again provided, no distability happens that is worse than the Bonifacio stand-off, and provided the political noise calms down, and provided GMA stays in power.

The fact is, no less than ADB today gave out a warning, published in the International Herald Tribune, and let me quote it.

Asian Development Bank sounds alarm on dollar
ReutersTUESDAY, MARCH 28, 2006

TOKYO Asian countries need to prepare for a possible sharp fall in the dollar and should allow their currencies to appreciate collectively if that happens, a senior Asian Development Bank official said Tuesday.

"Any shock hitting the U.S. economy or the global market may change investors' perceptions, given the existing global current account imbalance," Masahiro Kawai, the bank's head of regional economic integration, said at a news conference.

"Our suggestion to Asian countries is, don't take this continuous financing of the U.S. current account deficit as given. If something happens, then East Asian economies have to be prepared." Kawai said the chances of a rapid fall in the dollar were still small, but it could cause a significant turmoil in Asia if it happened.

"If the U.S. dollar goes down in the future, it would be best for East Asian countries to allow appreciation collectively," so that the costs of adjustment could be divided among them, he said. "I don't think the possibility is high," Kawai said of a dollar plunge, "but it is like avian flu: the possibility of avian flu spreading all over Asia or the world is limited, but once it spreads, it would have tremendous impact."

Kawai said that by East Asia, he meant emerging East Asian markets, excluding Japan. Kawai said the Manila-based development bank's planned establishment of an Asian currency unit, made up of a basket of Asian currencies, would help monitor the collective path of regional currencies in relation to the dollar.

Well, kong makikinig lang sana ang mga politiko natin na mamahinga muna sa pamumulitika even just for one year - palagay ko, it will have more impact on our lives than any policy, or anything supposedly for the good of out people. Actually, I am startin to believe that the root cause of poverty in the country is too much politics. Di kaya?