By APD Writer Melo M. Acuna
The Philippines’s economic managers are closely watching the rise and fall of the Philippine peso against the US dollar.
Speaking at a forum hosted by the Foreign Correspondents Association of the Philippines (FOCAP) Tuesday, Finance Secretary Carlos Dominguez III and Budget and Management Secretary Benjamin Diokno said the Philippine peso is “market determined.”
They explained should the Philippine peso depreciates, the cost of imported items will go up.
“Debt servicing will go up a bit,” Secretary Dominguez said.
However, he was quick to explain the export sector stands to benefit should the peso appreciates against the US dollar.
He added the country’s overseas Filipino workers and their families will benefit from it along with Philippines-based business process outsourcing companies which will be more competitive.
“It is not the rates that we watch but the rate of change, the speed the currency moves,” he further explained.
Appreciation of the local corrency would also displace people in the economy as any depreciation would also be bad.
“The country’s imports outclass exports because we import a lot of factory equipment including steel, rails and other items that cannot be sold locally such as train coaches,” Mr. Dominguez explained.
Meanwhile, Budget Secretary Benjamin Diokno said the country’s problem is how to create jobs.
“We assume there are 10 million overseas Filipinos with an average of five persons to a family, they benefit from a weaker peso,” Mr. Diokno added.
Both members of the economic team said Bangko Sentral ng Pilipinas Governor Nestor Espenilla should also be credited for managing the country’s monetary concerns.
Mr. Diokno said the country has experienced an exchange rate of US$ 1 to P 55.00. some years ago.
“We ran out of dollars to finance our obligations,” he explained.
Today, Mr. Diokno said the country’s gross national reserves amount to some US$ 80 billion as foreign remittances and BPO revenues continue to add to the economy.
Mr. Dominguez said economists are vetting on another rate hike in the United States before the year-end or early next year.
He added if people would import frivolous items it will turn out bad.
However, he said should Filipinos import more trucks “we will import capital goods, factories are set up and jobs will be created.”
“We manage the inflation rate rather than the exchange rate because more than half of the population are benefitted,” he further said.
He identified investments amounting to P 115 billion, P 65 B of which comes from Macquarie for the purchase of 31 or 32% of Energy Development Corporation and some P 50 billion from Japan Tobacco for the purchase of controversial Mighty Corporation which was sued for using fake revenue stamps.
Secretary Dominguez said some P 30 billion will go to the government coffers.
“These investments only show the kind of confidence private corporations have in the Philippines,” Secretary Dominguez added as he downplayed beliefs the controversial extrajudicial killings and the Marawi siege would result in lack of investor confidence.
(ASIA PACIFIC DAILY)