BSP UNFAZED by PESO DEPRECIATION trend
THE Bangko Sentral ng Pilipinas (BSP) shrugged off worries on the recent depreciation trend of the local currency, saying structural foreign exchange flows to the country are expected to remain strong in the coming months.
In a virtual press briefing on Thursday, BSP Governor Benjamin Diokno said that while the local currency is displaying weakness against the dollar in recent weeks, the long-term value of the peso remains stable as per their monitoring.
“While short-run fluctuations in the peso are affected by market sentiment, its mediumto long-term movements are largely supported by economic fundamentals,” Diokno said.
“Looking ahead, we expect the peso to be supported by structural foreign exchange flows such as overseas Filipino remittances, business process outsourcing receipts and eventually by earnings from tourism activities. Furthermore, foreign exchange inflows related to foreign direct investments are also expected to help shore up the currency,” he added.
According to data from the Bankers Association of the Philippines (BAP), the local currency closed at P50.305 on Thursday with a trading volume of $993.8 million.
The DTI chief reiterated that implementing enhanced community quarantine (ECQ) anew will take a toll on the micro, small and medium enterprises (MSMES), whose cash flows were already weak following the earlier imposition of the strictest form of community quarantine.
Currently, Lopez said that about 8 to 10 percent of the MSMES are shut down due to challenges brought upon the lockdown measures. More restrictions will only bring the figure up, he added.
He also told the reporters on Thursday that another major lockdown will be too costly for the economy, estimating that P30 billion worth of wages may be lost from a two-week lockdown. This, as 1.8 million workers are seen to be affected if the National Capital Region plus bubble will be put under ECQ, he added.
“The economy cannot bear another massive lockdown, unless the situation really calls for it,” he said.
The trade official said the Covid-19 cases are still “within manageable levels,” and the Delta variant is being closely monitored.
He noted that the moves regarding community quarantine measures only favor essential activities to avoid the so-called super spreader events and are finalized with the aid of health experts and advisers.
“What is key is we allow the economy to reopen in a safe and very calibrated way, but we make more restrictions on non-essential activities and mass gatherings and definitely no super spreader activities,” Lopez explained.
With this, Lopez reminded the MSMES to always follow the health protocols imposed amid the pandemic to support the safe reopening of the economy.
“As long as we have intensified vaccination rollout plus strict public health standard and granular lockdown, we keep the economy going and save jobs and livelihood,” he added.
No to hard lockdown
BUSINESS groups made a clarification regarding a two-week hard lockdown amid the threats of Covid-19 Delta variant, noting its anticipated adverse impact on the already struggling economy.
The Philippine Chamber of Commerce and Industry (PCCI), in a statement, said it was not endorsing further mobility restrictions as these will hamper economic activities.
“One of our leaders was misquoted and was explaining that we need to wait and see if the health care sector can cope with the recent surge of cases and not be overwhelmed if the rise in cases continues,” PCCI Acting President Edgardo Lacson said. “Even medical doctors are divided on the Delta variant that although it is highly contagious, it is not fatal.”
1-week heads up
BASED on several reports, however, PCCI President Emeritus George T. Barcelon, who is also chairman of the Philippine Exporters Confederation of the Philippines (Philexport), was among the business leaders that agreed to the hard lockdown. Others include Federation of Filipino Chinese Chambers of Commerce and Industry Inc. (FFCCCII) President Dr. Henry Lim Bon Liong and Presidential Adviser for Entrepreneurship Jose Ma. Concepcion III.
The reports were based on a forum held on Wednesday.
Barcelon told the Businessmirror that he did not endorse having a twoweek major lockdown as this is up to the government.
“[If] the gov’t wants to do a lockdown, the private sector is requesting a one-week heads-up be given to prepare. Not that we agree to their ‘lockdown’ decision which we don’t, unless necessary. The economic downside to establishments and employees is not something we can afford,” he explained.
Philexport President and PCCI Honorary Chair Sergio R. Ortiz-luis Jr., who also heads the Employers Confederation of the Philippines, clarified in a recent radio interview that these business groups were not for strict lockdown.
Another lockdown will translate to daily losses of some P1.2 billion, he estimated. “It will especially hurt daily wage earners and those in the non-essentials sector,” Ortiz-luis explained.
Lacson shared the same sentiment, saying it will be “disastrous to the economy,” which has been suffering from losses already following a previous lockdown.
Accelerate vaccination
PCCI said the government should focus instead on quicker rollout of the vaccination program to protect the population.
“The full opening of the economy hinges on the successful rollout of the anti-covid vaccination program to reach herd immunity by inoculating 70 percent of the population before the end of this year,” Lacson told the Businessmirror in a recent interview.
“But the much delayed and inequitable allocation/distribution of the Covid vaccine coupled with logistical problems that spoiled some vaccines may keep the target date unattainable,” he added.
To allow further mobility, the PCCI also recommended providing incentives to the fully vaccinated population. These included permission to travel across provincial borders or to enter establishments freely.
“The virus will be with us for months, maybe years, and we have no choice but to live with it. This is how other countries have fought the virus. Lockdowns will cause even greater hardships for our people,” Lacson concluded.