DOF: Peso 3rd weakest currency in Asia but…

While the peso was the third weakest currency among the fastest-growing Asian countries to date, the Department of Finance said Tuesday that the domestic currency’s volatility against the US dollar remained at par with its regional peers.

“The Philippine peso has been moving in tandem with Asian currencies amid severe exchange rate volatility spawned by the global trade war, the Turkey-Argentina crisis, and the Fed monetary normalization,” DOF Undersecretary and chief economist Gil S. Beltran said in an economic bulletin.

Beltran said as of Sept. 4, the peso’s year-to-date depreciation against the greenback was 7.39 percent. Only the Indian rupee and the Indonesian rupiah depreciated more by 11.7 percent and 9 percent, respectively.

“These are also the countries with the highest GDP growth rates—India at 8.2 percent, Philippines at 6.3 percent, and Indonesia at 5.2 percent,” Beltran noted, referring to the three countries’ average first-half gross domestic product growth.

“Since July 31 when emerging markets were the target of adverse hot money movements as contagion spread from problems in Turkey and Argentina, the Philippine peso depreciated by 0.82 percent, ranking fifth among eight Asian countries whose currencies depreciated,” Beltran said.

Even as the peso weakened to almost 13-year lows, Beltran said “the coefficient of variation shows that the volatility level of the Philippine peso, at 1.91 percent year-to-date, reflects the average for 12 Asian countries” in his report, which besides the three aforementioned countries also included China, Hong Kong, Japan, Malaysia, Singapore, South Korea, Taiwan, Thailand, and Vietnam.

“Volatility ranges from 0.14 percent for Hongkong to 3.13 percent of China,” Beltran said.

Volatility refers to the magnitude of currencies’ fluctuation since the start of the year.

For Beltran, “maintaining good macroeconomic policies through manageable fiscal and balance of payments balances, and adopting economic reforms through tax reforms are still the best way to sustain growth and investment and, at the same time, steel the economy from external economic shocks.”   /vvp