Listed below are today's best exchange rates for US Dollar to Philippine Pesos, in real time, from various money transfer companies that will help you make an informed decision to send money from USA to Philippines. Current USD to PHP Exchange Rates.
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As the backbone of the global economy and a reserve currency for international trade and finance, the US dollar has maintained its upward spiral versus major currencies. Higher US Treasury bond yields have diverted investment funds from emerging economies, including the Philippines.
The dollar has increased by more than 11% against the major currencies. The relative worth of the US dollar is determined by the US economy’s activity and outlook.
Before we get to the factors affecting the US dollar to Philippine peso exchange rate, USD to PHP today, and ??USD to PHP forecast, let’s understand what an exchange rate is and what factors influence exchange rates between currencies.
What Is An Exchange Rate?
The rate at which one country's currency may be converted into another is how the exchange rate is defined. It may fluctuate daily due to changing market forces of currency supply and demand from one country to the next.
The foreign exchange rate of a country serves as a window into its economic stability, which is why it is closely monitored and researched.
Factors influencing currency exchange rate influencing are significant for a variety of reasons. These factors can have an impact on how countries trade with one another and how much money an individual can get when exchanging one currency for another.
If you're sending or receiving money internationally where currency exchange is involved, you'll want to keep an eye on currency conversion rates.
Although understanding, tracking, and even anticipating these factors is not always straightforward, it is beneficial to be aware of them, especially if you are interested in foreign exchange rates.
Suppose you want to send money internationally online. In that case, you can use CompareRemit’s comparison tool online or download the app (on iOS and Android) to get the best rates and fees for your transfer.
Factors Affecting Currency Exchange Rates
Inflation
Inflation is defined as a currency's relative buying power compared to other currencies. For example, buying an apple in one country may cost one unit of currency, but buying the same apple in a country with higher inflation may cost a thousand units of a different currency. Inflation differentials are the reason why various currencies have varying purchasing power and, as a result, different currency rates.
Low-inflation countries tend to have stronger currencies than those with higher inflation rates. Higher inflation rates, on the other hand, cause the currency to depreciate, losing purchasing power and value in comparison to other currencies.
Interest Rates
Inflation, interest rates, and currency exchange rates are all linked together. Each of these variables has the potential to influence the other two. Low inflation and high-interest rates can entice foreign capital into a country, bolstering its currency.
Higher interest rates provide higher rates to lenders, thereby attracting more foreign capital seeking higher returns, causing exchange rates to rise. Central banks use interest rates to control inflation and exchange rates.
However, if these rates are kept too high for too long, inflation will begin to rise, resulting in currency depreciation. That is why central bankers must change interest rates regularly to balance the benefits and negatives.
Public Debt
The majority of countries use large-scale deficit financing to fund their budgets. To put it another way, they borrow to fund economic growth. If government debt grows faster than the economy, it can raise inflation by preventing foreign investment from entering the country, both of which can depreciate a currency.
For instance, if the market expects a country's government debt to default, foreign investors will sell their bonds on the open market. As a result, the value of the currency's exchange rate will fall. A government may print money to finance debt in some instances, which can lead to further inflation.
Balance of Trade
The relative difference between a country's imports and exports is known as the balance of trade or terms of trade. A positive trade balance, for example, suggests that a country's exports outweigh its imports. The influx of foreign currency is greater than the outflow in this situation. When this occurs, a country's foreign exchange reserves increase, allowing it to cut interest rates, boosting economic development and the local currency exchange rate.
Current Account Deficit
The current account deficit and the balance of trade are inextricably linked. A current account deficit occurs when a country spends more than it earns.
The balance of trade of a country is compared to that of its trading partners in this scenario. When a country's current account deficit is larger than that of a trading partner, it can weaken its currency against that of that trading partner. As a result, currencies in countries with positive or low current account deficits tend to be stronger than those in countries with big deficits.
Political Stability
A country with a stable political environment attracts more foreign investment, which helps to keep the currency rate constant. A country with good financial and trade policies does not allow its currency's value to be unpredictable.
Poor political stability, on the other hand, devalues a country's currency exchange rate. Local economic drivers and financial policies are also influenced by political stability, two factors that can have long-term implications for a currency's exchange rate.
Economic Performance
Another factor that influences exchange rates is the economy's health or performance. For example, a country with low unemployment means its residents have more money to spend, which aids in the development of a stronger economy.
A stronger economy draws more foreign investment, which helps to cut inflation and increase the country's currency exchange rate. It's worth mentioning that economic health is more of a catch-all word that includes a variety of other factors such as interest rates, inflation, and the trade balance.
Confidence/ Speculation
The level of confidence (or lack thereof) that traders have in a currency can have an impact on its value. If the value of a country's currency is predicted to rise, investors will want more of that currency soon to profit. As a result of the increased demand, the currency's value will grow. The exchange rate rises in tandem with the increase in currency value.
Currency fluctuations driven by speculation tend to be irrational, abrupt, and short-lived. For example, traders may devalue a currency in response to an election result, especially if the result is seen as bad for trade or economic growth.
In other circumstances, traders may be optimistic about a currency due to economic news, which may lead the currency to rise even though the economic news had no impact on the currency's fundamentals.
Government Intervention
Governments have a variety of options at their disposal to control their local currency exchange rate. To regulate currency exchange rates, central banks can adjust interest rates, buy foreign currency, influence local lending rates, print money, and utilize other measures.
The main goal of controlling these variables is to create favorable conditions for a stable currency exchange rate, lower loan rates, more jobs, and strong economic growth.
Factors Affecting The USD To PHP Exchange Rate
Divergent Monetary Policies
In early May this year, the US dollar to the Philippine peso (PHP) strengthened, hitting 3.5-year highs. On May 9, the USD to PHP exchange rate reached 53.08.
However, the peso appreciated versus the US dollar after the Philippines' central bank, the Bangko Sentral ng Pilipinas (BSP), raised interest rates on May 18. On May 24, the USD to PHP exchange rate was 53.27. Despite this, the USD to PHP exchange rate was 8.8% higher than in the same period the previous year.
Before May 18, the BSP had maintained a dovish monetary policy and a record low-interest rate of 2% to protect the Philippines' post-Covid economic recovery.
The Philippines' economy recorded 8.3% gross domestic product (GDP) in the first quarter of 2022, marking the fourth consecutive quarter of growth following the Covid-19 pandemic-induced contractions in 2020 and 2021.
Furthermore, the BSP predicted that average inflation in the country would grow to 4.6 percent in 2022 and 3.9 percent in 2023, owing to higher oil costs and persistent local pig and fish shortages.
The Philippines’ central bank was compelled to tighten monetary policy faster due to a worsening inflation outlook and an improved growth outlook.
In 2022, the United States tightened its monetary policy by rising Treasury bill rates to absorb more US dollars in the market and reduce inflation.
The Federal Reserve of the United States (Fed) hiked interest rates by half a percentage point on 4 May, following its first hike in over three years on 16 March, when the rate was raised by 0.25 percent.
The peso weakened versus the dollar as the latter traded higher due to the two countries' differing monetary policies. Furthermore, rising US Treasury yields have redirected investment away from emerging markets, putting additional pressure on the peso's value.
Rising Oil Prices
Before the pandemic, a surge in capital goods imports caused a rapid widening of the current account deficit, which pushed hard on the currency. The Philippines is a net importer of crude oil. Imports that are too expensive, such as oil, depreciate the peso.
The widening current account deficit, which is being exacerbated by US dollar outflows due to high-cost petroleum imports, was contributing to the peso's woes. This adds to the Philippines’ slow transition to economic recovery.
Drop-In The Stock Market Index
The peso's weakening, according to experts, is attributable to a "collapse in the local stock market."
The Philippine Stock Exchange Index (PSEi) fell 228.85 points, or 3.38 percent, to 6,539.04, its lowest level since May 17, 2022, when it ended at 6,594.66.
The peso's depreciation was caused by $23.6 million in net foreign selling on the local stock exchange after the OECD (Organisation for Economic Co-operation and Development) cut its world economic growth predictions, a day after the World Bank did the same.
The OECD expects global GDP to slow to approximately 3% this year as a result of the impact of the Russia-Ukraine conflict on food and energy costs.
It can be said concerns about inflation, exacerbated by high oil prices and a weaker peso, weighed on investor morale.
Large Scale Infrastructure Projects: Government Debt
The peso is also experiencing the strain of additional capital goods being imported for infrastructure projects under Duterte's ambitious "Build, Build, Build" program.
Ferdinand Marcos Jr, the recently elected president of the Philippines, is eager to continue President Duterte's 'Build, Build, Build' infrastructure initiative.
This year, the Philippines' GDP is predicted to rise by 7.5 percent, falling within the government's target range of 7 to 9%. However, after the pandemic policy response, there may be difficulties in reducing government debt.
While pandemic disruption is now mostly in the past, the massive toll from the previous disruption implies output will always be behind its pre-crisis trend. Poorly managed public infrastructure investment might contribute to a government debt rising faster than nominal GDP if governance standards degrade.
With virus cases at an all-time low and all activity restrictions lifted, the economy is expected to bounce quickly this quarter, returning to pre-pandemic levels of output by the middle of the year. However, there would still perhaps be a significant gap between GDP and pre-pandemic forecasts.
Although the gap may gradually reduce over the following quarters, aided in large part by a gradual return of overseas tourists, serious long-term damage has already occurred.
Business insolvencies, weaker household balance sheets, and labor market disruption will deter a desirable output.
Economy Reopening
Despite the depreciation of the peso and increased pressure on the goods trade deficit due to higher global energy prices, positive factors such as the gradual reopening of the Philippines' tourism sector could help the country's economy.
Furthermore, the country's official reserve assets stood at a comfortable $107 billion at the end of April 2022, only marginally down from $109 billion at the end of 2021, indicating credit strength.
Benjamin Diokno, the Philippines' central bank chief, said he was not concerned about the peso's recent decline against the dollar because the country has minimal reliance on foreign debt and a large reserve pool.
Foreign remittances from overseas Filipino workers (OFWs) totaled $2.888 billion in March 2022, up 3.1 percent from the same month the previous year, according to BSP data. In the first quarter of this year, overall cash remittances increased by 2.4 percent year on year (YoY) to $7.771 billion.
The country’s long-term prospects remain unclear. It will be determined by the influence of the Marcos administration’s policy agenda once important appointments are made, especially in the economic team.
USD to PHP Forecast 2023
Most economists forecast the Philippine peso to decline further versus the greenback by 2023 and 2024, falling from 54:$1 to 55:$1 due to rising dollar demand.
Based on recent data, the USD to PHP exchange rate has been fluctuating, with the Philippine peso showing strength against the US dollar. In early April 2023, the USD to PHP exchange rate was trading around 47.50 to 47.60, reflecting a depreciation of the US dollar against the Philippine peso.
This trend may be attributed to several factors, including the Philippines' economic recovery from the COVID-19 pandemic, strong domestic demand, and government efforts to support the local currency. However, various factors such as changes in monetary policies and geopolitical events can impact the currency pair's movements and may lead to volatility in the exchange rate.
WalletInvestor, on the other hand, forecasts a bullish dollar to peso (USD/PHP) exchange rate over the next 12 months, with the peso rising to 51.847.
To sum up, analysts' USD to PHP estimates are not set in stone and are subject to change. Conduct your research at all times.
If you are looking to send money to the Philippines from the U.S., your families can benefit more from the decline in the value of the peso. Compare your money transfer options before you send the money.
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