Getting to know folks who own dollar investment accounts generally give the impression that they’re in the upper echelons of society. They may be branded as one of the financial upper class who can afford to have the flexibility of owning foreign currency, but this shouldn’t be the case since dollar investments are now becoming more accessible to many Filipinos.
The US dollar has always been considered as the most powerful currency in the world. This is the reason why it has always been ingrained in a country’s economy. And since it’s where we base the value of our own local currency, the Philippine peso, it serves as the standard of foreign exchange around these parts. This kind of reputation has firmly established the dollar as an investment channel more suited to wealthier individuals.
With its current accessibility and dominant reputation, the US dollar is worth considering for Filipinos when making an investment. And when the dollar is strong, this puts you at an advantage.
But, what does this mean exactly?
The Strong Dollar
A strong dollar means that the US dollar has reached near historically high exchange rates for the other currency relative to the dollar. A strengthening US dollar involves buying more of the other currency than it did before. On the other hand, a weakening US dollar has fallen in value compared to the other currency. This results in less foreign currency purchasable with the same amount of dollars.
For instance, if USD/PHP was quoted at 50.90, this means that $1 USD = 50.90 PHP. If this value drops to 45.87, the US dollar would be said to have weakened compared to the Philippine peso, since $1 USD equates to fewer pesos than before.
The US dollar reached its highest levels in years right after Donald Trump won the presidential election. However, since then the dollar has been considerably volatile after investors had adverse reactions to Trump’s tax and international trade policies.
Even though fluctuations could make you think otherwise, a strong US dollar doesn’t equate to a strong US economy as many experts believe. In fact, during the 2008 financial crisis, the dollar appreciated significantly against almost all currencies even if the US itself was at the epicenter of the said crisis.
As the US economy continuously recovered from the 2008 financial crisis, the US dollar has since appreciated in value. Overseas, investors around the world are turning their attention to the US dollar in the hopes that it will continue its upward trend.
How Does the Strong Dollar Affect Filipinos?
An average person would know that a strong dollar is generally associated with imports and exports. US imports will become cheaper while exports will be more expensive. However, there’s more to it than what’s commonly known: a strong US dollar can have a global impact on financial markets.
Most large companies produce resources and revenue both in the US and abroad. As the US dollar appreciates in value, production costs increase for multinational companies, affecting company profits. Similarly, companies operating overseas are paid in foreign currency, and when this income is sent back it means profits will be worth less. Essentially, this reduces the value of corporate profits and margins from overseas operations, which in turn lowers share prices.
This may seem like it presents an adverse effect, but for those who are keen on making dollar investments, a strong dollar is generally advantageous in a way that it has a more substantial value when it’s traded in the international financial market. This not only creates revenue but also helps secure your future.
In the Philippines, the US dollar is frequently associated with overseas Filipino workers who regularly remit funds back home. Just in December of 2018, the Philippines reached $3.15 billion in remittance, which is 3.6 percent higher compared to when it last peak at $3.04 billion a year before.
The influx of dollars in the country can allow people who receive these remittances more access to investing using the currency. This allows you to put you at an advantage when the dollar is strong, so it would be prudent to invest in dollar-denominated funds like Dollar Protect Plus. This can be beneficial for several reasons:
- Diversify your investment portfolio
- Low-risk wealth creation
- Fulfill your wealth distribution goals
- Open global opportunities for your children through the most accepted currency
- Protect the future of you and your family using the currency
A Strong Dollar Is Good for Your Dollar Investment
The bottom line is that since the dollar has always remained relatively strong, it’s always a good idea to invest in dollar-denominated securities. They diversify your investment portfolio and enable you to make bigger plays in the financial market. There is more to gain when using the most dominant currency in the world. It can help protect not only your future but also your family’s financial security.
For more inquiries about Dollar Protect Plus., you can talk to a Bancassurance Sales Executive at any of 900 BPI and BPI Family Savings Bank branches nationwide.