Monday, October 4, 2010

Which currency?

Aah! holiday. Today is labor day in Australia. A day for hardworking employees, including foreign workers like me. Its been a year since I posted something on this blog but today would be a good day as any to write whats on my mind.

Lately I've been thinking about what currency should I put my investments in. Currently, I earn most in Australian dollars, which is approaching parity with the US currency. Should I buy US dollars now that they're cheaper to buy or stick with philippine pesos? If I answer yes, then what for? Actually I don't have any use for foreign currency since I'm not engaged in import/export nor do I plan to go to america in the foreseeable future. The thought of investing in US dollars came to me because my uncle kept half of his lifetime investments in that currency. I think he bought dollars in the 60's where the exchange rate is $1=Php5 or something and he's now cashing in with the amazing exchange rate of $1=Php45.

But that was the 20th century and I think we have different factors in play this time. First, I am optimistic with the economic future of the Philippines and therefore the future of its currency. My uncle placed his investments in US dollars because he predicted back then that the peso would lose value relative to it. But at present, I think the peso would gain value relative to it and other currencies. Afterall, when you're at the bottom, there's no way but up. The past trend has actually reflected this from an exchange rate of Php55 during the Estrada presidency to what it is now at Php45. Thre are many factors that influence a currency's value against another. In fact speculators make money out of forex. I could be wrong on this and only time will tell if I have made the right decision. But I trust my instinct and most of all, I trust that the economy of the Philippines will go up. Therefore I would keep half of my investment money in australian dollars and place it here and place the other half in philippine pesos. I just hope they offer more investment options in the future as I currently keep the bulk in mutual funds.

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