Historical Peso Exchange Rates Analysis
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WiZofFaTeHistorical Peso Exchange Rates Analysis
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Powered by AIFamilies with varying income levels face different financial obligations and priorities. Higher-income families can afford more discretionary spending after covering essentials, often selecting well-maintained housing and prioritizing quality education . They might also allocate significant portions of their income towards savings and investments, minimizing financial vulnerability . Conversely, lower-income families are more likely to allocate a larger percentage of their income to essentials such as rent, utilities, and food, leaving limited room for savings or discretionary expenses . As a result, they may experience increased financial strain and have less flexibility in their budget to absorb unexpected costs or to invest in long-term benefits such as education .
A family with a PHP 200 daily budget can allocate more towards housing as compared to a PHP 100 budget, providing greater options for more spacious or well-maintained accommodations. With PHP 200, they can save PHP 70 a day for a monthly rent of PHP 2,100, affording a small but organized apartment . Conversely, a PHP 100 budget necessitates stricter prioritization with just PHP 35 a day for rent, resulting in even smaller living conditions . The lower budget would likely constrain the family to housing that, while functional, may lack additional comfort or privacy, possibly affecting their overall quality of life .
The absence of saving by parents can severely affect long-term financial stability and limit educational opportunities for children. Without savings, families may face difficulty in managing unexpected expenses, reducing their ability to invest in their children's education or respond to emergencies efficiently . This lack of financial cushion can force families to rely on debt, potentially exacerbating financial instability. Educational opportunities may become restricted if there is insufficient money to cover tuition, thereby limiting children's potential to attend better schools and, by extension, reducing future income potential and career opportunities .
Allocating a portion of the family budget to savings is crucial as it provides a financial safety net for unforeseen expenses, ensuring long-term stability and security . For higher income families, saving might focus on planning for larger investments or future financial goals, such as college funds or retirement . In contrast, lower-income families might prioritize saving for emergencies and basic needs, which are less predictable and can disrupt daily life if not pre-planned for . The amount saved thus often correlates with income levels, impacting the family's financial resilience and ability to meet future obligations .
Government provision of public goods, such as highways, sanitation, schools, and national defense, offers several advantages: ensuring universal access, preventing market exclusion, and maintaining social welfare . These goods are provided publicly because they are non-excludable and non-rivalrous, meaning their availability to one individual does not reduce availability to others . Market provision could lead to under-consumption or inequality because private entities might exclude those unable to pay or prioritize profit over public welfare . Consequently, government provision is deemed necessary to ensure equity, reliability, and comprehensive coverage, benefiting society as a whole even if the market could technically provide them .
The economic policies greatly influenced the peso's exchange rate. Under Diosdado Macapagal, the peso was unpegged from the USD to stimulate economic development, resulting in a devaluation from P2 to P3.7 per dollar due to its free market float . During Ferdinand Marcos' era, political unrest such as the First Quarter Storm and Ninoy Aquino's assassination led to further depreciation, with the peso plummeting to P20 per dollar . The Asian Financial Crisis under Joseph Estrada exacerbated the peso's drop to P50 per dollar, reflecting both economic mismanagement and regional instability . Corazon Aquino's administration saw a rise in the value of P11 to P25.75 per dollar, indicating the country's continued vulnerability to external shocks and political instability . Finally, administration and policy changes under Gloria Arroyo and Benigno Aquino III saw some stabilization with fluctuating values around P45 to P56 per dollar .
Significant movements in the Philippine peso exchange rate have been primarily caused by political instability, economic mismanagement, and regional crises. For instance, during the First Quarter Storm and the assassination of Ninoy Aquino, political unrest and lack of confidence in governance led to sharp declines in the peso's value . The Asian Financial Crisis, characterized by severe capital outflows and regional economic downturns, led to an abrupt devaluation of the peso from P26 to P41 per dollar within a year . Additionally, systemic issues such as corruption and economic mismanagement during the Estrada administration further contributed to depreciations .
Allowing the peso to float on the free exchange market under Macapagal had several benefits and drawbacks. The main benefit was increased competitiveness, as it allowed the market to determine the exchange rate, potentially improving exports by making them cheaper on the global market . However, the drawbacks included heightened vulnerability to external economic fluctuations and speculative attacks, leading to currency devaluation from P2 to P3.7 per dollar shortly after the policy change . Moreover, the domestic market faced increased uncertainty and inflationary pressures as a result of the rapid adjustment in exchange rates .
The tax burden influences family financial planning by necessitating prioritization of essential expenses over new or discretionary spending. For instance, families might allocate tax savings towards critical areas like groceries, tuition, and utilities, ensuring these necessities are covered before considering leisure activities or emergencies . High tax obligations can limit additional savings, impacting long-term financial goals such as home ownership or larger educational investments . Tax payments consequently compel families to meticulously budget, emphasizing routine costs over luxury spending to maintain financial stability .
Political stability plays a critical role in influencing the Philippine peso's exchange rate. Instability, such as during the Marcos era with the assassination of Ninoy Aquino and subsequent national turmoil, greatly weakened the peso against the dollar . Similarly, attempted coups during Corazon Aquino's presidency contributed to exchange rate volatility as they negatively impacted investor confidence . In contrast, more politically stable periods, like the later years of Gloria Arroyo's administration, saw relatively stable exchange rates, as evidenced by a moderate peso appreciation to around P45 . Thus, political stability tends to directly affect economic perceptions that heavily influence currency strength. .
