Gov’t must keep peso above 40 to $1

Official says weak currency a boon to economy

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Photo by Noy Morcoso lll/INQUIRER.net

The peso should stay above 40 to a dollar to help ensure the Philippines will keep its robust-growth momentum, according to Socioeconomic Planning Secretary Arsenio Balisacan.

Balisacan, who is also director general of the National Economic and Development Authority (Neda), said the recent depreciation of the peso to the 43:$1 level would eventually prove to be a boon to the economy. He said this would help boost exports, improve competitiveness of locally produced goods and further fuel consumption of households dependent on remittances.

The peso last year and in the first quarter of this year was one of the fastest appreciating currencies against the dollar on the back of significant foreign capital inflows.

While a 40-to-a-dollar rate would still be tolerable, Balisacan said an exchange rate stronger than that could derail efforts to boost the country’s competitiveness.

“I wouldn’t want to see the peso appreciating to 37 or 38, or simply the 30s (to a dollar) territory. That would hurt local industries,” Balisacan said.

He said measures that could prevent a sharp appreciation of the peso would be prudent, citing the government’s inclination toward borrowing more from domestic sources. This would be a good strategy not only to minimize exposure to foreign-exchange risks but also to help avoid a sharp appreciation of the local currency, he added.

With less foreign borrowings,  dollar inflows are tempered and the peso is kept from significant appreciation.

The government decided not to borrow from foreign, commercial sources of credit this year. It said all funding requirements will be met mostly through the sale of government securities in the domestic market.

“The current level of the peso is fine,” Balisacan said.

The weakening of the peso back to the 43-to-a-dollar level followed an increase in the appetite for the greenback amid speculations that the US Federal Reserve would soon end its stimulus program, under which it buys enormous amounts of bonds to inject liquidity and boost the American economy.

Liquidity arising from the bond purchases partly spilled over to emerging markets like the Philippines in the form of foreign portfolio investments. A withdrawal of the stimulus is seen to eventually cause emerging market currencies to depreciate. Such speculations prompted some fund owners to shift to the dollar.

Balisacan said the depreciation of the peso was beneficial and would complement efforts to make the robust economic growth of the Philippines sustainable.

The local economy grew by 7.8 percent in the first quarter from a year ago, registering the fastest growth rate in Asia.

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  • parefrank

    40 to a dollar? that is good for the gov. to get the OFW remittances cheap. And for the big importing business which then sells the goods local at prices that would belong to a rate of rather 60 than 40. With this profits, they can then buy into companies around the world. Common people and exporters are the losers. It looks as if the RP is the only country where economy, exports, investments and tourism are boosted by making it more expensive.
    Compare the local purchase power of the peso with the time when the rate was at the 50 to the dollar and you see that the high valued peso has much less purchase power than the low peso before. But this is the only interesing to a customer, a tourist or investor.
    One liter imported milk was 42 pesos or about 80 cent, now it is80 to 125 or up to near 3 dollar. One kilo beef was 160 or 3 dollar, now up to 460 pesos or 11 dollar.We had to go from Cebu to the copper mines and the taxi was about 160 pesos, now it is at least 800 pesos. Wherever you look, the peso lost extreme purchase power, despite its pushed high exchange value. Big business is of course happy, because they buy their goods for 40 pesos per dollar and sell it for 80 and more per dollar. That is why they can make “sale, 50% discount” and “buy one, take one” and still have profits.
    Belongs to the Prp Poor policy?

  • Chrisnadal19

    lack of knowledge is dangerous.. commenting and pretending to have more knowledge is far more dangerous.

    • Pitbulldog

      So this is the year of living dangerously with yellow minded intellectuals like you around, perched on top of their stupid horse manure P-noy.

      • Chrisnadal19

        very dangerous indeed.. and very lame comment too.

  • carlcid

    “Liquidity arising from the bond purchases partly spilled over to emerging markets like the Philippines in the form of foreign portfolio investments. A withdrawal of the stimulus is seen to eventually cause emerging market currencies to depreciate.” – PNoy attempted to con Filipinos into believing that his governance caused the stock market to boom and the peso to rise. Now, it’s become clear that it was excess liquidity, not PNoy, which caused stock and property prices to shoot up. Nakiki “ride on” lang si PNoy, ngunit bistado na sya ngayon.

  • HKamaru

    Maybe Balisacan has a huge dollar investment… Tapos OFW, malungkot, mababa palitan, lugi!

    • UF29

      The OFW will be happy. He earns in dollars/foreign currency. He will be able to buy more goods when he converts them to pesos.

      • HKamaru

        only when the prices goes down… $1=P43 vs. 1kg rice=P45… you know what I mean…

      • UF29

        Regardless if pesos prices goes up or down, the OFW is happier if the peso depreciates / dollar appreciates.

        Using your example above, if the forex becomes Php46/1$ he can now buy the kilo of rice with just $1.

      • HKamaru

        would it be more happier when the 2 kg of rice priced at 45 pesos? or P22.5/kg…

  • tom_bbt

    what is important is the gov not to intervene with the peso appreciation

  • Weder-Weder Lang

    Now Mr. Balisacan has finally admitted he was wrong. In his interview with Solar TV earlier this year, he was so sure that the peso would breach 40 to the dollar and should be allowed to do so. Now, the 180 degree turnaround.

    • carlcid

      Balisacan has had to swallow a lot of dung lately. PNoy gave him the cold shoulder, and made him eat his words, after Balisacan released a study showing that the situation of poverty in the Philippines has not improved since 2006. Balisacan was correct, but he walked back his statements a few days later. At the rate Balisacan has had to walk things backward, he might get stuck on reverse.

      • Weder-Weder Lang

        Arsenio is so kawawa. It’s hard to tell what else PNoy will force down Balisacan’s throat next time. Bon Appetit Mr. Balisacan.

        In retrospect, Mr. Paderanga was right to leave PNoy before the forced feeding got ugly.

  • getreal911

    Globally-Induced Inequality (resulting to poverty)
    http://download(dot)jw(dot)org/files/media_magazines/19/wp_E_20110601.pdf

    (replace dot with .)

  • Pitbulldog

    It is just your simlplistic way of voicing your frustrations instead of admitting the fact that you cannot temper anymore the peso’s steady slide to the 50:1 territory, you idiots. These pathetic economic gurus of P-noy had done a poor job indeed, denying P-noy one of his best bragging point that he was able to drag the peso down thru his admin’s excellent economic policies, syet. Probably P-noy will wisely reverse his tact next time. They are allowing this to happen because he cares for the overseas workers and exporters kuno. Syet nyo again. You have already spent three years in that limbo of yours, P-noy.

    • lucidlynx

      You speak as if you know more about economics than Arsenio Balisican who has a PhD in Economics. And you call him pathetic.

      The Japanese Yen is 101 to $1. And it is in this situation that the Japan economy thrives which happens to be an export oriented economy, same as what Balisican has described in the article. Japan’s economy is also very much consumer driven. Of course in Japan, their citizens would pay more for goods.

      And your use of gutter language depicts the kind of person you are.

      • Pitbulldog

        So yellow fans of Pinoy like you are always at a beck’s call to rush in defense of their beloved Messiah. I tell you, frankly, I don’t care if the peso slides or not. But it seems that these statistics are the only posters you find in Malacanang’s Bulletin Board as if your idiot P-noy has pllaced his success and survival upon it. Open your eyes and look at the deceptions and idiocies despite the many PhD holders sorrounding the retarded leader of yours. You can put all these brains together and squeeze out the best ideas from them. It wil always depend on a leader who has the right vision and priorities to succeed. I am sure P-noy is busy with his speech writer revising his speech for the SONA and will be skipping much the unappealing economic issues, for sure.

      • Chrisnadal19

        ignorant fool… frustrated commentarista..haha.. balik sa pag-aaral ng economics.

      • Pitbulldog

        Ek ek nyo yellows…go back to basics and don’t just trust your retarded economics flunker idol.

      • Chrisnadal19

        poor you fool. very lame.

    • huseng_batute

      Sino kaya ang simplistic ang view?

      I’ll give you an example. Our company exports our products. Alam mo kung anong currency ang ibinabayad sa amin? US$. Alam mo kung anong currency ang ginagamit sa pasweldo sa mga empleyado? PHP. Anong currency ang ginagamit namin pambayad sa Meralco? PHP. Anong currency ang ginagamit namin na pambayad sa tubig? PHP. Anong currency ang ginagamit namin pambayad sa shuttle bus service? PHP.

      Ano ang ibig sabihin pag bumaba ang US$? Bumaba ang PHP selling price ng produkto namin. Anong ibig sabihin nito? Umuunti ang PHP na pambayad namin sa sweldo, kuryente, tubig, suppliers, at iba pa.

      Ilang libong companies sa Pilipinas ang nag-e-export? Di ko alam, pero madami. Ilang daang libong employees ang dependent sa export industry? Di ko rin alam pero madami rin yun. Ilang daang libo ang dependent sa employees ng export industry? Di ko rin alam pero tiyak ako na mas marami yun.

      Tanong ko ulit… sino ang may simplistic view?

    • Chrisnadal19

      simply ignorant..

  • Kamoteng Baging

    Eksaktamento. Weaker peso is better for export based industries (includes BPO services) and OFW.

  • UrHONOR

    ARTIFICIAL rate as BSP has been supporting the USD ab initio.

    • lucidlynx

      It is not artificial if you find the rate is the same as it is being reported by foreign news agencies. Besides, how can you make the rate artificial? Who’s paying for the difference? The money changer? The Central Bank? Ano magpapaloko ba ang mga ito?

      • UrHONOR

        >>>BSP has been supporting the USD<<<

        MAGPAPALOKO? Buong mundo nga naloko ng US sa sub-prime, currency exchange rate pa? Alam mo ba yong ginawa ni Soros sa BAHT noon na ang rate was not real but artificial? Madaling lokohin ang walang nalalaman.

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