MM value change: Should we change?

As you may have noticed, the MM value for the big countries around us (US, China, India, Indonesia) have all severely plummeted from their pre-New World high. Most of the are in the range that the BOP is currently setting in the MM (0.017 g per ePHP).

The reason for our current MM value was to remain competitive in the world market, and try to be, the cheapest producers of manufactured goods so people would build here and export out. The basis for this decision lay in low labor costs (relatively), and economic theory that said if one lowers (relative) price for goods, there would be an increase in quantity demanded, and thus more profit for the business. Due to ambiguous data given by the eRep API and other sources, it was never determined whether this was an effective strategy for the ePHP.

Now the goal remains the same, but the paradigm has shifted. Current MM value are in the 0.01 - 0.02 gold per currency range for the countries that are usually have the largest populations. Only three (at the time of this article) had MM values at the 0.02 boundary marker.

The BOP sets the ePHP at 0.017 g per PHP. The question is 'Should this continue'?

Thoughts?

Hi Negosyo,

Nice to see you again.
And of course you are the best resource person when it comes to MM.

As of this writing, our MM is 1php = 0.013 gold.

But we are not sure if how long will this MM problem around the world last.
Or will this be permanent? - i hope not.

If we will try to set PHP in it original price (0.017) I think it would be good for those who are holding PHP in their pocket. And those who buy product outside the country.
But the problem here is HOW?
We already tried to stabilize the MM few days or a week ago, but we are unsuccessful to set back the price to 0.017.
And also, we noticed that when we tried to pull it back to 0.017, the spead is so big since on the other side of the MM offer is 1 gold = 80+PHP.

I really don't understand why our MM is going down while we are at war, usually, it should have gone up, since food and weapon consumption is high and thus, PHP demand is high.
-or am I wrong with this thinking?

[Edit] Additional thought
Or maybe because we have war, everybody want to convert their PHP to gold for health kit? or to buy weapon outside the country, since we don't have enough products offered in our market.


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On the other hand, if we will go with the flow of MM, and set it at 0.013 - 0.014, we can achieve our goal to be one of the cheapest product in the world market.
And this is advantageous to the exporter, since our salary will be lower in terms of gold.
At the same time, the spread will be lower, and with this rate, the buying and selling of gold, is somewhat stabilize.
But our PHP on hand will be devalued so much.

It seems a LOT of PHP got dumped on the market and no-one wants to buy it, which confuses me. As you said, Rev, people should be at least buying PHP for food to fight, but it doesn't even seem like that's happening. I haven't seen our currency dip below 0.013, so I wouldn't post at that. If we want to follow the same policy as before though, 0.014 does not seem to bad.

Well we're talking about dropping the value by 24% :/ Maybe we can compromise and shoot for .015? That's only a ~12% drop and has an exchange rate of 66.66 = 1 PHP.

Revilo, you are right--the latest wars focus on having G even more than before.

I realize that those who are selling PHP at very low rate are those companies who import product to us.

btw, the current rate as of this writing is 1 PHP = 0.012 gold.


I suggest, what if we raise import tax of those product where we are sufficient.

For example, Food and if possible grain.

Will this help?

Since if they won't sell in ePH, they will never hold a PHP to sell in the MM at low rate.

If 700 q1 food a day is enough to feed ePH, I can do that by myself

We only need low import tax there if we're at war, I think

Taxes would be incremental in changing the current market value. Consumption might go up, but I have this hunch that the PHP has pretty much saturated its market demand. So the best course is just to wait and hope it gets better.

With that in mind, I think selling a lot of PHP from the BOP right now is probably not a good idea. So I'll only post about 1000 PHP at 0.017 for now. I will also post other offerings of 500 PHP for 0.015 , and 500 at 0.016 to see what the market will bear.

I will also send inquiries towards some of our neighbors' financial ministers, or get MOFA to do it, about why their MM values are down.

My worst nightmare would be going down to 0.01 range. But as of this post, MM value went up to 0.015. :)