Choosing words

Administration officials prefer to attribute the weakening of the peso to actions of the US Federal Reserve. But the administration cannot completely ignore observations of investment analysts that statements issued by President Duterte are creating uncertainty, which contributed to pulling down the peso this week to its lowest level in seven years.

The peso has recovered slightly and diplomats have so far maintained that the governments they represent would continue to pursue friendly ties with the Philippines. But privately, several diplomats have reportedly started relaying to Philippine officials concerns raised by businessmen from their countries about the drug-related killings and the pugnacious volatility of President Duterte.

Investors like stability and a measure of predictability. And like it or not, business sentiment can pull down the peso. Credit rating agency Standard & Poor’s announced it was not downgrading the Philippines’ investment grade, painstakingly attained during the previous administration. But S&P noted “rising uncertainties” that would prevent a rating improvement in the next two years. Investment analysts also said recent statements issued by Duterte, including those against long-standing friends, were eroding business confidence.

That sentiment contributes to other pressures on the Philippine currency. While depreciation may be good news for exports, the sector that keeps the economy afloat in the worst of times will be hit hard by a weaker peso: Filipinos working overseas.

Positive credit ratings, which make doing business easier in the Philippines, can also quickly change for the worse if political volatility becomes chronic. While the rating agencies bombed big-time in the last financial crisis, their assessments still serve as guides for investors – people who create jobs and drive economic growth in the countries where they choose to operate.

Words can be deemed so powerful scores of journalists have been murdered in this country for critical commentary or reporting. Instead of disputing the impact of hurtful words on the nation’s allies, the administration should not discount the possibility that statements and consequent negative media reports can be bad news for the economy. There is nothing to lose and everything to gain in speaking with prudence.