For investors with existing dollar investments (BSP figures: around $20B in FCDU accounts), a weakening Dollar poses a real risk to their dollar investments, an interest earning of 0.25% to 3.0% today may not be enough to offset the currency loses if for example the peso strengthen further to 40 (+8% from current levels). $10,000 at Php 44 today is equal to Php 440,000, if the $10,000 earns 0.25% it would be $10,025 one year from now, if FX then is 40 it would only be worth Php 401,000. (a peso loss of 8.86%).
The only way is protect dollar investments today is to HEDGE it in a commodity based dollar asset (oil/gold/other precious metals) as its dollar price will go up if the dollar continues to lose value.
For example OIL: The Saudis as one of the major oil producers do not have the dollar as its native currency, if the dollar weakens they would demand more dollars for the same amount of oil and this would cause the price of oil to go up, a Filipino investor invested in oil assets would be in the best position to capture this price increase effectively negating FX losses if the peso appreciates.
.jpg)
