There’s a reason why traveling Filipinos exchange their Philippine pesos to U.S. dollars before exchanging it to the local currency (e.g., PHP to USD to NTD). That’s because they think they can get more value for their money when they see that the exchange rate is higher. Also, they believe the U.S. dollar is a mighty currency all around.
Indeed, the U.S. dollar is the most traded currency in the foreign exchange market and arguably the strongest currency in the world. It is also regulated by almost every central bank around the world, and used as a standard currency in purchasing commodities.
This means is that now is a good time to invest in the U.S. dollar, especially for those who are looking to diversify their portfolio and potentially grow their money even further.
If you’re a dollar earner or a Filipino investor with a high-risk appetite, here are a couple of reasons that will convince you to invest in dollars today, so that you can live a financially secure and comfortable life tomorrow.
1. Growth of remittances by OFWs
Overseas Filipino Workers (OFWs) are called modern-day heroes for several reasons. Not only do they ensure a more comfortable future for their families, but they also play a significant role in the growth of the Philippine economy by sending their hard-earned money to their families.
In 2018, money remittances by OFWs reached an all-time high at $3.15 billion, which closed the annual tally to $32.21 billion—a 3% increase from the previous year. This growth has a positive effect on the country’s yield of foreign exchange. Since this boosts the country’s gains in foreign exchange, the money order fortifies the Philippines’ balance of payments position. In turn, it serves as a huge source of foreign currency for the nation and strengthens the surpluses on current accounts.
2. Strong U.S. economy
The U.S. dollar is one of the strongest currencies in the world, and for several reasons. Since the euro's downfall and its high fluctuations which have rendered its value less stable, the U.S. dollar is positioned at a favorable rank. It even dominated over the yen and yuan in terms of additional giants. Moreover, the U.S. economy has been expanding in recent years.
Another reason why the U.S. currency is strong is due to its high interest rates, which make the dollar more valuable and U.S. bonds more beguiling to foreign investors.
When thinking about diversifying your portfolio, consider investing in the U.S. market for asset allocation since it’s the biggest financial market in terms of market capitalization. They also have a more liquid market and a roster of large entities to invest your hard-earned cash.
3. More accessible dollar-denominated funds
Today, more Filipinos have access to better investment instruments to help grow their wealth. One of which is allowing them to have a foreign asset, which makes it easier to engage in diversified portfolio on a global scale. Filipinos can now hold an international credit for dollar investments where they can find minimal risks and maximized gains as they play in a less competitive market.
Yes, OFWs and capable local Filipino workers alike can put their money to work on dollar-denominated securities. You can check out our previous post to get enlightened as to why dollar investment isn’t just for the wealthy.
Filipinos interested in investing in the global market can look into dollar-denominated assets and securities, forex trading, and directly investing in U.S. stocks for attractive yields. For OFWs who want to grow their hard-earned money while also ensuring a better life for their family, products like Dollar Protect Plus offers the best of both worlds, combining life insurance and dollar investment into one convenient package. Investment instruments like these can help you build your wealth and take care of your family come unexpected events.
4. Supply and demand for dollars
If you’re looking to step into the global market arena for diversifying your portfolio, you’ll find safety and good returns in the U.S. economy. It also serves as a safe middle ground at times of global economic instability.
When U.S. products and services are exported, customers need to pay for these goods and services in dollars. When the U.S. government or American entities issue bonds to increase their capital to be bought by foreign investors, the payments need to be in dollars. When non-U.S. investors buy U.S. corporate stocks, they need to purchase it in dollars. One way or another, customers and investors need to sell their currency to buy dollars—to purchase goods, services, bonds, stocks, etc.
This creates demand for the U.S. currency, influences its supply, and in turn, raises the value of the currency being sold to buy U.S. dollars.
Summing it up
The Philippine Stock Exchange constitutes just a mere one percent of the global stock market. If you want to kick your investment game up a notch and gain more attractive profits, delve into the world of dollar investment. And there’s no better time to invest in it than now (the second best time is tomorrow).
Want to find out more about how and where you can start with dollar investment? Feel free to drop by at any of 800 BPI branches nationwide and inquire to a Bancassurance Sales Rep for more info. Get started today!