Changes come and go in life. Some changes are good, some changes are bad. Some are neither good nor bad, just different. But, for sure, change is a constant thing.
In recent years, because the worldwide economy has been faltering, many people have had to go without a raise in their salary. Wages have stagnated over the years, and if you do get a raise, it is often a tiny raise.
People who are expats in the Philippines, though, have gotten a huge raise over the past few months! Even those who don’t work have gotten a “salary increase.” How? Why? Because the value of the US dollar has been climbing, and the value of the Philippine Peso has been falling. After about 7 years of a very weak dollar, it is truly good to see us starting to gain a little more buying power!
When I first moved to the Philippines, the US Dollar was worth roughly about 40 Philippine Pesos. Within months after coming here, though, the Peso started a steady decline in value. Within just a year or two, the US Dollar was worth more than 50 Philippine Pesos! As the exchange rate continued to improve for expats, the dollar finally reached it’s top value of just over P56, and it stayed there for some time. In around 2006, though, the dollar started falling like a rock! The dollar was again below P50, and still falling. Soon, it settled around P47, but didn’t take long to resume it’s nose dive!
For the past couple of years the dollar has been fluctuating between P40 to P42 or so to the US Dollar. While I, and most other expats, have not been happy with this valuation of our dollars, we have gotten used to it and sort of resigned ourselves to the fact that this is what our money has come to be worth. Sad, but reality.
About 3 months ago, many of us expats started to notice a bit of an uptick in the value of our currency. The Peso started falling. The Peso had been pretty firmly at the P40 level since the first of the year (and even before), but suddenly it was getting to about P42! Nice. That was a 5% jump in value for the dollar, and while it was nice, it was not that noticeable. But, when the dollar started getting up to P43 or a bit more, you could start to feel the difference!
Right now, as I write this article, the dollar is worth P44.7. We are getting ever so close to a P45 dollar! And, you can really feel the difference, financially. For example, if you transfer $1,000 from your US bank account to your Philippine account, that means you get an extra P4,400 or so now compared to the first of the year. At the beginning of the year, P4,000 was the rough equivalent of $100, so now you are roughly getting an extra $110 or so when you change $1,000. That is about an 11% increase. It’s great to see again! I don’t recall having a dollar increase this large since the dollar started falling in 2006. I’m liking it!
For me, and many expats, I earn US dollars. I am self employed with lots of different types of businesses, but all of my clients are overseas, not in the Philippines. I have clients in the USA, Europe, Australia and New Zealand. All of my clients pay me in US dollars. So, having this improved rate of exchange is just like getting a pay raise! And, it’s a nice raise, I must say, about an 11% increase in the period of only a few months. Of course, I took a huge pay cut over the past 6 or 7 years as the dollar fell in value, so this increase is just moving me back to the area where I used to be! Also, you never know, things could start moving back the other way at any time.
One question that I have heard from lots of expats over the past few months….
Bob, why is the exchange changing now?
Well, I am no expert, and anything I way would be a guess. I have been doing some research, and the most common reason that I see in the news is that there is a lot of talk about the USA cutting back in the spending they have been doing trying to stimulate the economy there. Coming up in a week or two, I understand that the US Federal Reserve board is going to be meeting, and one of the things that is a main topic at the meeting is cutting back on QE3, the Quantitative Easing program where the Fed has been pumping about $85 Billion per month into the Stock Market. If they cut back on QE3, we will likely see even more increased value in the US Dollar. That would certainly be nice for those of us who live abroad!
So, yeah, I”ve gotten a raise lately. And I’m liking it!