DOF claims peso remains very strong

After the peso plunge to its lowest level in seven years, the Department of Finance (DOF) argued that the local unit remains very strong.

In terms of real value, the local currency will actually help improve the competitiveness of the country's exports and the value of dollar remittances, the department said in a statement on Wednesday.

This benefits around 40 percent of the domestic economy, according to the DOF.

Finance Undersecretary Karl Kendrick Chua noted the peso is 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 and dollar receipts from the business process outsourcing sector.
 
“While the peso has moderately depreciated in nominal terms in recent weeks, the peso in real terms is still very strong, which deters competitiveness," Chua said.
 
“This means that the depreciation in recent weeks is welcomed as it will help improve export competitiveness and value of remittances, which benefits around 40 percent of the economy,” he added.

On Monday, the peso sank to a seven-year low at P48.250:$1 as foreign funds pull out of Philippine financial markets.

The peso is just seeking its appropriate value, given that it has appreciated significantly in previous years, DOF Undersecretary Gil Beltran.
 
“The GIR (gross international reserves) at $85.6 billion, which is equivalent to 10.5 months of imports, is higher relative to ASEAN (Association of Southeast Asian Nations) and should not be a cause for alarm,” Beltran said.
 
Chua noted the movement of the peso is in line with the global currency market, as the currency’s depreciation of about 2 percent was even lower 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).
 
“Compared to these currencies for the same period, the peso is broadly in line with the market,” said Chua in reaction to the peso’s depreciation by 2 percent against the greenback from $1:P47 rate last July 1.
 
"We should be prudent to ensure that volatilities are managed," he added. — Ted Cordero/GMA News