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THE Philippine peso slumped to its lowest value in seven years to R48.41 per United States (US) dollar at the close of the Philippine Dealing System last Monday, rebounding slightly the next day. It was the lowest level since the R48.335 on September 15, 2009.
Gov. Amando Tetangco Jr. of the Bangko Sentral ng Pilipinas (BSP) said the development reflected uncertainty over the US Federal Reserve policy. While it kept rates steady, markets were said to be betting on a rate hike after the US November election – which would strengthen the dollar and, correspondingly, weaken the other currencies, including the peso.
Other analysts, however, expressed concern that the drop in the peso’s value in last Monday’s trading is also related to “rising concerns about political stability” as a result of President Dutere’s public statements on the European Union, the United Nations, and President Obama and American forces in Mindanao. Rising tensions could discourage investors, they said. Some credit risk rating agencies’ have said they might lower the country’s ratings if uncertainties continue.
There are emerging stresses on the economy which may be exacerbated by non-economic factors, in the words of one economist. The President’s often misquoted statements, it was added, were aggravating the situation.
It must be said that certain sectors in the country welcome the drop in the value of the Philippine peso, notably our overseas Filipino workers (OFWs) whose dollar remittances to their families have increased in peso value. But if the fall continues, our importers will suffer and prices of imported goods will rise. Possibly the most critical of these importations is gasoline, diesel, and kerosene whose prices impact on consumer goods and services.
We hope that the peso value will stabilize in time, before it causes any substantial harm to our economy and to the lives of our people. There is not much we can do about the uncertainty over US Federal Reserve decisions, but we could look after our own decisions, actions, and public statements that could cause uncertainty in our country’s economic and political stability.