DOF says peso stable amid global headwinds

The peso has become one of the most stable currencies in the region despite the presence of headwinds in the global economic landscape, the Department of Finance (DOF) said.

In his latest economic bulletin, Finance Undersecretary and chief economist Gil Beltran said the peso was among the seven Asian currencies that appreciated in January, making it one of the least volatile currencies in the region.

He said this development came amid challenges in the global market and following the move of the Bangko Sentral ng Pilipinas to raise interest rates last year.

“The Philippine peso continues to be one of the more stable Asian currencies despite the uncertainties in the world market brought about by the normalization of Fed (US Federal Reserve) monetary policy, Brexit, volatile fuel prices and US-China trade war,” Beltran said.

“The country also had to raise policy rates to counter inflationary pressures due to the drop in agricultural production and geopolitical issues that pushed petroleum price to its highest level in four years,” he said.

In particular, Beltran said the peso as of end-January 2019 appreciated by 0.73 percent to settle at 52.17 from the 52.56 to $1 recorded as of end-December 2018.

It was ranked as the seventh strongest currency in the region, following Thailand baht (which appreciated 3.37 percent), Indonesian rupiah (2.9 percent), Chinese yuan (2.46 percent), Singaporean dollars (1.22 percent), Malaysian ringgit (1.01 percent), and Japanese yen (0.87 percent).

This is a reversal of the local currency’s movement in 2018, when it depreciated by 5.4 percent and ranked the fourth most volatile currency among 12 Asian countries.

“The Philippine peso is also among the least volatile with coefficient of variation at 0.32 percent year-to-date, tying with South Korean won as the third least volatile currency. In 2018, the coefficient of variation of the peso was recorded at 1.91 percent, ranking seventh among 12 currencies,” Beltran said.

Last Friday, the local currency slightly weakened against the dollar, closing at 52.07 to $1.

Finance Secretary Carlos Dominguez earlier said the government has maintained its economic growth target of seven to eight percent this year despite headwinds in the global economic landscape.

The finance chief expressed confidence that the Philippines would not be significantly affected by the global economic slowdown, given the amount of investments the Duterte administration is pouring into the development of the nation.

Dominguez also gave assurance that the government is determined to push reforms that would bring about strong and inclusive economic growth for Filipinos.