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When the United States Dollar-Philippine Peso Exchange rate was hovering at around P44+ to a dollar,
Filipino businessmen who have dollar savings started to withdraw, exchange them to Philippine Peso and
place it in mutual funds. Experts who give out a fearless forecast predict a 37 to 1 exchange rate by the 1st
quarter of 2008. The more conservative ones say it will be P 39 to a dollar by 2008. However, most of
them agree that it will be in the P 30 ++ level by 2009. There are those who give higher than P 35
production, others lower say it is lower than that.

Most likely, the Philippine Peso will keep on getting stronger in the coming months because of these
reasons:

1.) 
    
 - More supply of dollars means the dollar becomes
cheaper. In the same way the less demand there is for dollars, the cheaper it becomes. What could be the
reason why the Philippines have an oversupply of U.S dollars? The following reasons could provide a
clue:

a.) ÿ
 



 
 
  
- Out of the more than 80 million Filipinos, an
estimated 8 million left the country to seek work overseas. The total number of Filipinos worldwide is
estimated to be about 11 million. This trend is likely to continue and as this continues so will the flow of
U.S dollars into the country further strengthening the Philippine Peso.

b.) 


   - According to the Central Bank, foreign direct investments (FDI) from
January to September 2007 aggregated to US$1.9 billion. This is higher by 22.3 percent compared to last
year's US$1.6 billion (In the same period). Most Investors now see that the Philippines is good place due
to the following reasons, effective Fiscal reforms implemented by the government, strong economic
fundamentals, our growing business process outsourcing potential and liberalization of mining laws. Most
of the foreign investments in the country went to mining, real estate and manufacturing. This is the reason
why the stock market remains to be bullish, the inflation rate is low, and the GDP is high etc. This results
to a good business environment for investors. More investors are expected to come in as this trend
continues. As more "hot money" flows into the country, the supply of dollar continues to increase.

c.) 
 




  - The Department of Tourism reports that Tourist arrival increased 8.6
percent from a year earlier. This translates to 2.5 million additional tourists. Tourists spend a lot of money
while they are in the country. This helps increase the supply of U.S dollars in the country.

d.) 
 
- Exports has also grown despite the appreciation of the Peso. However the growth in
this sector is led by Business Process Outsourcing business and not the traditional business. The
Philippines remain to be one of the favorites when it comes to Business Process outsourcing.

e.) 
  
   - People are tired of political bickering, political mudslinging and engaging in
activities that call for the resignation of the president. It cannot be denied that the existing administration
has maintained its grip and influence creating a somewhat stable political environment.

2.) D   - While it is true that our strong economic fundamentals helped push the Peso
upwards, it also cannot be denied that the Peso got a little help from the weakness of the U.S dollar. The
economic problems of the U.S due to the sub-prime mortgage crises have been causing the U.S dollar to
further weaken. This factor helped push the Peso upward.

As I review the previous years, the year 2007 closed with the Peso being named as the ³Best Performing
Currency in Asia.´ It is said to have gained about 18 % against the U.S dollar. This trend is more likely to
continue and a stronger peso is very much more likely in the month or even years to come, as being
shown in the graph below.
The graph below shows historical exchange rates between the Philippine Peso (PHP) and the US Dollar
(USD) between 4
  .


The graph below shows historical exchange rates between the Philippine Peso (PHP) and the US
Dollar (USD) between
   .

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