The Losing Power of the Pinoy Peso-- Again!

**creepy** · October 27th, 2008 12:36 PM

Two words: Dollar supply.

What's happening now is a great unwinding of US$ debt as global banks reduce their leverage. The effect of this is a massive contraction of US$ supply globally.

Basic economics teaches us that a reduction in supply (vs demand) results in a higher price. In this case, the shortage of dollar liquidity means the value of the dollar should rise.

**tidus1203** · October 27th, 2008 12:42 PM

The Yen carry trade is even bigger (that is borrowing cheap Yen with almost 0% interest [the Yen has been near 0% interest rates for almost 15 years now

] to buy Australian Dollar etc with 7% interest rates etc.), almost all hedge funds use this to acquire leverage during the boom days. Watch out for the Yen.

**uls** · October 27th, 2008 01:08 PM

Panic selling

PSE halts trade after main index falls 10 percent

---

fund outflows

sell stock holdings, sell pesos, buy dollars, get the hell outta here

P49.34 to $1

**tidus1203** · October 27th, 2008 02:18 PM

And it falls some more after trading resume

Nako mga matatanda na naka hawak ng UITF panic na yan pag publish ng NAVPU mamayang 3PM

**uls** · October 27th, 2008 02:28 PM

May statement na ang G7 re strong yen

intervention likely

Bloomberg:

The "unusual'' statement indicates policy makers are one step closer to international currency intervention, said Takahide Kiuchi, chief economist at Nomura Securities Co. in Tokyo. "If the yen appreciates below 90 yen, that may trigger a move.''

yan ang sinasabi mo Tidus... ung Japan intervention pag lumakas sobra ang yen

**tidus1203** · October 27th, 2008 02:36 PM

The question is will the BOJ have enough bullets to intervene at a relevant level for the Japanese economy. I think they can intervene for a month but if the market really wants to buy up the Yen the BOJ can only do so much. Its one thing to manipulate stock markets, its totally another to manipulate currency markets.

**Skidrow** · October 27th, 2008 02:43 PM

Question po mga econ guru-I have a substantial investment in the Phil Stock Market. I know that panic is prevailing right now but according to some analysts, a lot of these stocks are oversold. All of these selll offs are being triggered by panic.

I plan to hold on to my portfolio and not join the bandwagon. I lost a substantial amount already but I am still pinning some hopes that in 6 months or more, the market will recover. Is it the right thing to do or do I need to sell them now before everything is lost?

Now one knows where the "bottom" is at the moment. But trhere is still some hope i guess.

Thanks.

**tidus1203** · October 27th, 2008 02:51 PM

Yeah if you can wait like what? 5 years or something like that... But its true kung ipit ka na ngayon I think wag ka na magbenta its pointless to do so anyway...

**Eismann** · October 27th, 2008 02:52 PM

Some people I know disposed off their uitf's during the middle of the sub-prime mortgage crisis pa. Foresight tells you to get out of stocks when you can. but those who can wait may want to weather the storm and stay. Yup yen looked strong and will stay strong but usd is impacting most economies especially here in Asia.