By The SUN
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| Central Bank says almost all currencies have retreated against US dollar |
The Philippine peso settled at 55.97 to the US dollar today, recovering from the 17-year low registered yesterday at 56.06. It was the lowest close since Sept 27, 2005, when the peso hit 56.295 to US$1.
But today's recovery is of little consolation, considering that since the start of 2022, the peso has lost nearly a tenth of its value, making it the worst performing currency in Asean, or the Southeast Asian markets. The peso started this year at 51 to $1 and has since gone on a steady decline.
But Felipe Medalla, new Bangko Sentral ng Pilipinas (BSP) Governor, said in his first public statement that the decline is not unique to the peso.
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Nearly all currencies are weakening against the US dollar because the United State
Federal Reserve has been raising interest rates in its own fight against the rise
in US consumer prices, resulting in funds worldwide gravitating to the US, he
said.
The weak peso has benefited exporters and OFWs, in that
their incomes had been incresed in peso terms.
But such benefits have been limited.
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In the case of OFWs, the higher prices of goods their families
buy in the Philippines – at an inflation rate of 6.1 per cent last June -- require
them to remit more.
In addition, the effects of the Russian invasion of Ukraine
and the US-led sanctions against Moscow -- which raised world market prices of
wheat and crude oil, among other vital commodities – ensure that high inflation
would be long-term.
Exporters, on the other hand, earn just $6 for every $10 that
the country pays for products it needs to buy abroad.
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In April, for example, exports totalled $6.13 billion while
imports amounted to $10.90 billion, resulting in a deficit of $4.77 billion,
according to figures from the Philippine Statistics Authority.
This has helped erode the Philippines’ gross international
reserves (GIR), or its deposits of dollars to pay for these imports.
GIR decreased for the fourth straight month and stood at $101.98
billion at the end of June, down 5.6 per cent from $107.8 billion at end February,
according to BSP figures.
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But BSP said the amount left was still enough to cover 8.5
months’ worth of imports of goods and payments of services and primary income.
Michael Ricafort, chief economist at the Rizal Commercial Banking Corp., told the Inquirer: “The decline in the GIR somewhat correlated with the weaker peso in recent months. Nevertheless, the GIR is … still way above the minimum international threshold of three to four months and could still provide enough buffer/support [to counter] any speculations against the peso.”
Hopefully, new laws signed by former President Rodrigo
Duterte relaxing restrictions in foreign investments would be implemented to counteract
such dollar outflow.
These laws – which amend the Retail Trade Liberalization
Act, Foreign Investment Act and Public Service Act -- remove restrictions on
foreign ownership of companies in the business of electricity, petroleum,
water, seaports and public utility vehicles.
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| PADALA NA! |
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