When Should You Buy US Dollars in the Philippines?
If you regularly receive US dollars, whether from remittances from a family member working abroad or from your work, you may be looking for better ways to use them. Should you continue exchanging your dollar into pesos, open a dollar savings account, or perhaps invest in dollars?
In this blog, we’ll help you maximize the power of your dollars. We’ll discuss when is the best time to buy US dollars in the Philippines and if you should invest in dollars.
The US Dollar and Philippine Peso
You may be no stranger to watching the foreign exchange rates go up or down day by day. The exchange rate tells us the equivalent value of the dollar in peso.
The USD to PHP exchange rate operates under a system of freely floating exchange rates, which means that it’s influenced by the stock market, interest rates, money supply, trade balances, and so on. For example, following the principle of supply and demand, if more US dollars are demanded than offered, its value will increase in relation to the peso.
How does the Exchange Rate Impact the Economy?
The exchange rates play a crucial role in the economy. The fluctuations affect the prices of imported goods, services, and assets in the country. Conversely, it affects the prices of exported goods and allows economists to forecast future price movements.
What does this mean?
With a stronger peso, which means its value appreciates, the prices of imported goods and services decrease, which means a lower inflation rate for the Philippines. However, this also leads to higher prices of exported goods and services, which adversely affects our competitiveness against other exporters.
A strong peso is also good news for those looking to buy US dollars because you’ll need less money in pesos to buy a dollar.
The History of Exchange Rates
While the US dollar, being one of the strongest currencies, does not easily fluctuate in value, it is also not completely secure from the impact of the world economy.
In the Philippines, data from Investing.com shows that while the USD consistently remains of higher value than the PHP, it has fluctuated over the years from PHP 56.28 in 2005 to PHP 43.60 in 2014 to PHP 50.99 in 2021 and to PHP 55.46 in 2023.
So, investing in the US dollar, as it is with any currency or asset, requires an awareness of the risks it comes with.
When is the Best Time to Buy US Dollars in the Philippines?
With the knowledge that the value of currencies fluctuates daily, you may be curious: what is the best time to buy US dollars?
The truth is that there is no one best time to buy US dollars in the Philippines. Your best bet is to watch the foreign exchange rates and exchange your money when it is most favorable. You can check out forecasts of exchange rates for the next few days or weeks to guide you; but continue to check how much is the exchange rate of peso to dollar before you convert.
With that said, the historical pattern shows that exchange rates tend to be higher on the weekdays when markets are active. More specifically, the best time to trade USD/PHP is between 12:00 and 15:00 GMT when the market is most liquid.
Weekends tend to see higher USD value because foreign currency cash flows slow down. So, it may be a good idea to convert US dollars to pesos on weekends or whenever the former is stronger.
In contrast, it is best to wait for a stronger peso to buy US dollars.
Is It a Good Idea to Invest in US Dollar?
There are great reasons to invest in the US dollar. However, it is important to consider if doing so aligns with your financial goals.
As a general rule, it is a good idea to start investing in the US dollar when you have built sufficient savings and emergency funds in peso, which is the currency you likely use daily.
Investing in US dollars is great for diversifying your investment portfolio. It can open opportunities for investment instruments with greater ROIs.
It would also be smart to open a dollar account if you’re investing in dollar-denominated instruments. The best dollar account in the Philippines will allow you to skip various fees every time you withdraw from your investments, move your dollars more freely, and enjoy favorable interest rates.
As you may have guessed, there are seasons for the best times to invest in dollars.
When the dollar is weak, this is the best time to invest in dollar-denominated investments in companies whose revenues come from outside the US. You may also consider investing in exchange-traded funds (ETFs) in currencies you believe will become stronger against the dollar.
This is also the best time to exchange your peso for US dollar.
When the dollar is strong, stocks with limited international revenue perform better, making them great investments. So, you may consider investing in companies that derive their revenues primarily from the US.
This is also the best time to exchange your US dollars to Philippine peso.
Investing in US Dollar with RCBC
There is a wide range of products that you can take advantage of if you have US dollars in your hands.
RCBC’s foreign currency account offers greater convenience by letting you convert dollars to pesos online. No need to bring cash to a money changer. You can also maximize the value of the US dollar with RCBC exchange rates, which you can also check online.
A dollar account also makes it easier to transact in US dollars, so you can freely invest in dollar-denominated investments. You can use it to buy or deposit USD directly.
What makes RCBC’s foreign currency account one of the top dollar accounts in the Philippines is that it allows your money to grow with up to 0.125% interest rate while you wait for the perfect time to invest.
Are You Ready to Buy US Dollars?
Buying and investing in US dollars can be a profitable endeavor, but it must be done with a healthy dose of precaution. Our best tip is to wait for the perfect time to buy US dollars in the Philippines and find a reliable dollar account.
You can find more investment tips and information about our investment products here.
