The Philippine Peso (PHP) is going down and inflation is going up


The Philippine Daily Inquirer reported that the Philippine peso has hit a 12 year low.

The Philippine Star reported that the BSP will likely raise interest rates gain due to the very high inflation we are seeing now.

Based on what the current administration is doing (spending a lot of borrowed money), I think this trend will continue.

I personally foresee Php100 to 1USD within the next couple of decades.

My simple analysis is that if both trends continue, holding stocks of company's with good performance and whose operations are not sensitive to the exchange rate, will be good in the long run.  The peso is falling fast both in exchange rate and in terms of inflation.  In terms of avoiding inflation, holding private assets will in some significant ways be better than holding cash, or other interest bearing cash deposits/investments. 

In other words, if the peso is sinking, theoretically, stocks are good place to put some of your money.  So playing out the theory that the value of stocks is not directly brought down by inflation, stock values should (in theory) rise against an inflating currency (pound for pound).

However, do note that many businesses that will suffer due to a falling PHP vs. the USD.




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