DBCC: PH now draws more dollars than it spends

The government expects the peso to grow stronger and become more stable this year as the Philippine economy continues to benefit from robust foreign exchange inflows that set the country apart from its regional neighbors.

The interagency Development Budget Coordinating Committee (DBCC) said Wednesday the peso would likely average between 41 and 43 to a dollar this year and the next.

This is a smaller range and stronger than the previous 42-45:$1 assumption for both years.

“We are a structural current account surplus country. That means more dollars come in than we need to spend,” said Finance Secretary Cesar Purisima, a member of the DBCC and head of the cabinet’s economic cluster. “That’s the source of the peso’s strength.”

Purisima noted that the Philippine economy is strong enough to weather the recent volatility in financial markets caused by jitters over the United States decision to reduce its monetary stimulus.

Central bank Deputy Governor Diwa C. Guinigundo said the new assumptions were set before the US Federal Reserve announced that it would scale down its bond-buying program, which was meant to support economic growth.

The US Fed’s statements sent the peso crashing to its lowest point in over a year as foreign investors pulled out of emerging markets like the Philippines.

“Notwithstanding that, since the balance-of-payments (BOP) is expected to remain in surplus, the peso is expected to further stabilize,” Guinigundo told reporters.

The country’s BOP position is an account of all the foreign money that enters and leaves the economy during a certain period.

He noted that remittances from overseas Filipino workers (OFWs) still grew faster than expected last May, and is expected to sustain this rate of expansion until the end of the year.

Revenues from business process outsourcing (BPO) firms are also expected to continue to grow this year.