Finance chief notes gains under previous administrations
Economic growth under the past two administrations has taken the edge off the peso’s weakening, Finance Secretary Carlos Dominguez 3rd said.
“We are in a much larger and more diversified economy. The economy is very different from what it was in the 1990s,” Dominguez told reporters on Thursday when asked about the currency’s fall to P51 to the dollar.
“So the impact is not felt as much and we have to thank the administrations of [former presidents]Gloria [Macapagal Arroyo] and Noynoy (Benigno Aquino 3rd); they had very good economic management and diversified the economy,” he added.
Not all sectors will benefit from a weaker peso, Dominguez noted, but families of overseas Filipino workers (OFWs) will particularly welcome getting more for every dollar sent home.
“We have 10 million [Filipinos] abroad. Let us say their average family size is five so that is 50 million people who benefit. That is for the OFWs only,” he said.
The Finance chief added that least 1.3 million Filipinos working in the dollar-earning business process outsourcing industry would also benefit as the sector becomes more competitive.
“So there are winners and there are losers. I am not saying that everybody should be happy but if the majority is benefiting, then we should allow the market to take its course,” Dominguez pointed out.
He said market forces should be allowed to dictate foreign exchange movements, with monetary authorities stepping intervening only during times of extreme volatility.
“We do not manage the exchange rate. That is determined by the market,” Dominguez said.
“What we are watching very carefully is the rate of change. If it goes from P51:$1 to P53:$1 in one day, that would be worrisome. Let us put it this way: We are watching it, but we are not panicking,” he said.
Dominguez’s statements are in line with the Bangko Sentral ng Pilipinas’ (BSP) view that there is no cause for alarm over the peso’s decline.
“Definitely, we are not in a foreign exchange crisis. We allowed the peso to adjust moderately and gradually but I can assure that the BSP is in full control of the exchange rate,” central bank Governor Nestor Espenilla Jr. said last week.
While the currency has fallen by 2.5 percent since the start of the year, the BSP said this was still consistent with the government’s push for investments and export-led economic growth.
The peso fell into P51 per dollar territory last month as the prospect of war on the Korean peninsula spooked investors.
The currency lost 4 centavos on Thursday to close at P51.17:$1. Several analysts have said it could fall to P52:$1 before the end of the year.