The Philippine peso was the lone currency in the region that depreciated against the US dollar during the first quarter, but the Bangko Sentral ng Pilipinas (BSP) still sees a silver lining in the peso’s weakness.
The latest BSP data showed that the peso depreciated by 0.88 percent against the greenback in the first three months.
In contrast, other regional currencies strengthened during the same period, BSP data showed. As of March 31, the South Korean won appreciated 7.93 percent against the US dollar; the Japanese yen, up 4.62 percent; the Thai baht, up 4.02 percent; the Singaporean dollar, up 3.58 percent; the Malaysian ringgit, up 1.43 percent; the Indonesian rupiah, up 1.11 percent; and the Chinese yuan, up 0.79 percent.
The peso drifted to the 50:$1 level, the weakest in over a decade, beginning in mid-February. The peso’s depreciation peaked to 0.98 percent in February from 0.1 percent last January, BSP data showed.
“Based on the numbers, the Philippine peso appears to have weakened the most among selected Asian currencies,” BSP Deputy Governor Diwa C. Guinigundo said in an e-mail.
However, “over a longer period of assessment, such depreciation represents some compensation for previous strong appreciation of the local currency against the US dollar,” Guinigundo said.
The BSP official said the relative strength of the peso in recent years “would explain why, plus the lower inflation in the Philippines, the real effective exchange rate of the peso has been broadly stable in the last few years.”
This also meant a stable foothold for the country’s exports, he said. “Philippine exports are therefore expected to recover this year while remittances and BPO (business process outsourcing) revenues remain robust.”
The BSP expects exports to grow 2 percent this year, faster than last year’s 0.6-percent increase. Cash being sent home by Filipinos abroad through banks, meanwhile, are projected to rise by at least 4 percent from the record-high $26.9 billion in 2016.