The Bangko Sentral ng Pilipinas has shrugged off concerns over the effects of a weakened Japanese yen on Philippine trade, saying that Filipino exporters may actually benefit from the currency movement.
According to BSP Assistant Governor Ma. Cyd Tuaño-Amador, the Philippines is a key exporter of inputs to various finish products being exported by Japan. As such, she said, an increase in Japanese exports would mean the same for Philippine exports.
“The Philippines is part of the regional supply chain and is one of the countries feeding Japanese exports. Therefore, we can ride on the momentum of rising Japanese exports resulting from the weakening of the yen,” said Amador, commenting on the Japanese government’s stimulus measures that led to a weakened yen.
Some economists believe that the Philippines must be more aggressive in its dollar purchases. They said that, instead of merely buying dollars to help temper the peso’s appreciation, the BSP should buy much more to weaken the peso further.
They are urging the BSP to be as aggressive as other countries, led by Japan, in deliberately weakening their respective currencies to boost exports.
But Amador told the Inquirer that such claims are not entirely accurate. This is because Japan is one of the biggest buyers of various inputs, such as intermediate electronic goods, from the Philippines.
She said that the weakening of the yen, therefore, would boost not only Japanese but Philippine exports as well.
In January, Philippine exports to Japan reached $769.03 million, accounting for 19.2 percent of the total of $4.01 billion.
In a report the other day, the Bank of Japan (BOJ) said it would inject funds to the economy to double Japan’s money supply by the end of 2014. It would do so partly by boosting its bond purchases.
The BOJ also aims to reverse years of deflation, hoping to keep Japan’s inflation 2 percent.
An increase in the supply of yen is seen to aid the depreciation of the Japanese currency. In turn, this is expected to make Japanese goods cheaper to foreign buyers and boost Japan’s exports.
Japan has been criticized for implementing policies to depreciate the yen, making its exports more competitive than those of others.
But the Japanese government shrugged off the criticisms, as the BOJ announced that it would undertake an aggressive program to stimulate the world’s third largest economy.