Poe: ‘Political influence’ must not cloud BSP moves

As the peso continues to weaken against the US dollar, Sen. Grace Poe expressed hope that “political influence” would not cloud the judgment of the country’s monetary authorities in trying to stabilize the Philippine currency.

Poe, chair of the Senate public services panel, said the weakening peso reflected both the jump in the country’s import demand due to the government’s infrastructure program as well as the continuing dollar outflow following the hike in interest rates in the United States.

“The former is somewhat expected, but not so much the latter, because we are in a position to temper the appetite for dollars with our own interest rate policy,” Poe said in a text message.

The Philippine peso sank to its lowest level against the US currency in 12 years on June 20, closing at P53.48 to a dollar.

Weakest currency in Asean

At present, the peso is the weakest-performing currency among members of the Association of Southeast Asian Nations (Asean), hovering at the 53 level at the close of trading last week.

Poe said the Bangko Sentral ng Pilipinas (BSP) was in the right position to address the problem, considering that a weak peso might further fuel inflation.

“But this is best left to the BSP. We have experts there in the monetary board. Who are hopefully not letting political influence cloud their judgment,” she said.

“I also hope the peso’s weakness does not fuel more price increases, as this will further burden the consuming public and jeopardize the government’s efforts to stay the course with its tax reforms,” Poe said.

Sen. Sherwin Gatchalian said the depreciation of the peso against the dollar was “beyond the control” of the government due to external forces but there were moves to protect the currency from going down further.

Volatile market

“Now, the market is very volatile. Oil prices are going up; the peso is depreciating, but the peso depreciation is largely caused by the interest rates going up in America,” he told reporters. “This is actually beyond our control,” Gatchalian said.

He said the situation was exacerbated by the Philippines’ import-oriented economy.

Trade imbalance

“At the same time, we see the trade imbalance. We are an importing country. We import oil, almost 99 percent of oil. Power, we import half of our electricity through coal. We import almost everything, including rice. So, because we import, naturally the peso will depreciate,” he said.

“Now, you have external factors such as the United States, so the peso depreciated faster. If you noticed, our reserves are also going down from $80 billion to below $80 billion, so the market is very volatile,” Gatchalian said.

Asked if the government should intervene to arrest the peso’s decline, the senator said he believed some action was already being done.