Cebu business sector says: Peso plunge not due to Duterte’s remarks

CEBU, Philippines - While some experts and doomsayers are blaming Duterte’s controversial statements why the peso plunged to a seven-year low, the Cebu business sector believes otherwise.

"The capital outflow in the stock market is brought about by the strengthening of the U.S. dollar and their positive Federal policies. Businesses are less perturbed by political pronouncements. They will always go to where business is good and so far the business climate in the country has remained to be on an uptrend," said Mandaue Chamber of Commerce and Industry (MCCI) president Glenn O. Soco.

Budget Secretary Benjamin Diokno also clarified on Tuesday, in a report from GMA News Online that the peso plummeted to a seven-year low as a result of the impending increase in interest rates in the US, not because of President Rodrigo Duterte's controversial statements.

"The depreciation of [the] peso, as far as I'm concerned, is no cause for concern," Diokno explained at a press briefing in Malacañang.

"We've seen peso going to P55 in the past. The depreciation of the peso is a result of the strengthening of the dollar, more than the weakening of the peso," the Cabinet official said.

However, a Bloomberg report said that global funds dumped Philippine stocks for a 22nd straight day amid nervousness about the fallout from President Duterte’s anti-drug war and his outbursts against the US and the United Nations.

Soco believes that it is still premature to say that this development is caused mainly by the new government's fierce fight against criminality and drugs, and Duterte's harsh remarks against US and EU leaders.

"In fact there is improved business confidence especially in the administration's peace and order initiatives and proposed economic reforms," added Soco.

Foreign and local economists as well as credit watchers have heightened concerns on the political scenarios particularly hitting investors’ confidence in the “predictability” of the government’s economic policies.

"One of the key sources of comfort for investors is the presence of stability in our country. We also cannot deny the fact that our President's statements as our head of state will draw a lot of attention and may have some bearing on the decisions made by investors," said Cebu Chamber of Commerce and Industry (CCCI) president Melanie Ng.

However, Ng hopes that the Philippines will be able to attain stability in terms of the initiatives of the new administration. "Such that positive impact on these initiatives will manifest soon to deter any negative drawback if any."

In a statement, Bangko Sentral ng Pilipinas (BSP) Governor Amando M. Tetangco Jr. said, “the peso movement reflected continuing uncertainty about the US Fed’s next policy action, just like other regional currencies, plus the strong foreign exchange demand for fixing and corporate requirements.”

Last week the local currency fell anew for the fourth straight week by 0.36 percent week-on-week to P47.99 against the greenback on quarter end corporate demand.

Likewise, Standard & Poor’s ratings company said the predictability of policy-making in the Philippines has “diminished somewhat” under the Duterte administration. (FREEMAN)