Peso slides anew but remains strong in real terms, DOF says

The peso Wednesday reversed the slight gains made in the previous day and shed eight centavos to again close at 48.25:$1, a seven-year low.

But the Department of Finance (DOF) maintained that the peso “remains very strong in real terms.”

Wednesday’s close was the same as Monday’s, the weakest since Sept. 15, 2009’s 48.335:$1.

At the Philippine Dealing System, the peso reached an intraday low of 48.31:$1 and a high of 48.1:$1 after opening at 48.19:$1.

The total volume traded dropped to $441.2 million from $666.1 million on Tuesday.

“While the peso has moderately depreciated in nominal terms in recent weeks, the peso in real terms is still very strong, which deters competitiveness,” Finance Undersecretary and chief economist Karl Kendrick T. Chua said in a statement.

“This means the depreciation in recent weeks is welcomed as it will help improve export competitiveness and the value of remittances, which benefit about 40 percent of the economy,” Chua explained.

For Finance Undersecretary Gil S. Beltran, “the peso is just seeking its appropriate value, given that it has appreciated significantly in previous years.”

“The gross international reserves at $85.6 billion, which is equivalent to 10.5 months of imports, is higher relative to Asean and should not be a cause for alarm,” Beltran said.

Further, “the movement of the peso is in line with the global currency market, as our currency’s depreciation of about 2 percent was even slower than the  fall in the value of the Malaysian ringgit (3.5 percent), British pound (2.7 percent), Australian dollar (2.2 percent) and Japanese yen (2 percent),” Chua said. “Compared to these currencies for the same period, the peso is broadly in line with the market.”

Chua nonetheless stressed the need to be “prudent to ensure that volatilities are managed.”

Moving forward, the peso was expected “to remain broadly stable over the medium term as it is propped up by solid macroeconomic fundamentals along with the steady stream of remittances from overseas Filipino workers (OFWs) and dollar receipts from the business process outsourcing (BPO) sector,” the DOF said.