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Strong peso shows confidence in PH -DoF



The sustained appreciation of the local currency against the US dollar is a vote of confidence in the Philippine economy amid the global health crisis, the Department of Finance (DOF) said yesterday.

Finance Secretary Carlos G. Dominguez III said the peso has emerged as among Asia’s strongest currencies owing to the country’s mild inflation rate and the government’s fund raising program aimed to cushion the impact of the global economic turmoil.


Dominguez said the government’s foreign borrowings and weaker imports boosted the bigger balance of payments (BOP) surplus, which contributed to the strong performance of the peso and record-high foreign currency reserves.


As of yesterday, the peso already appreciated by 4.5 percent against the US dollar at 48.48 from 50.8 at the beginning of the year.


“Confidence in the Philippine economy and the local currency are also among the factors that have raised the value of the peso against the US dollar,” Dominguez said in a statement.


The drop in the country’s imports as compared to its exports during the strict lockdown led to an overall favorable BOP position, which contributed to the strong performance of the peso, Dominguez said.

The Bangko Sentral ng Pilipinas earlier reported an overall BOP surplus of $80 million in June this year, a reversal of the $404 million deficit in the same month last year. Dominguez said this favorable BOP position is reflected in the unprecendent amount of $98 billion in GIR at end-July, equivalent to 8.9 months’ worth of imports of goods and payments of services and primary income.


The country’s latest GIR is also about 7.5 times the country’s short-term external debt based on original maturity. 


On the other hand, the country’s inflation remained low at 2.7 percent at end-July.“Our inflation rate is relatively mild. And I think people have confidence in the Philippines, in the currency.

If I’m not mistaken it’s only the Philippine peso and the Japanese yen that have actually appreciated in values since the beginning of this year,” Dominguez said.


Along with Philippine peso and the Japanese yen, the Taiwanese dollar and the Chinese yuan also remained firmed against the US dollar, while most other Asian currencies have weakened.


Source: Manila Bulletin (https://mb.com.ph/2020/09/01/strong-peso-shows-confidence-in-ph-dof/?utm_source=rss&utm_medium=rss&utm_campaign=strong-peso-shows-confidence-in-ph-dof)

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