Weakening peso ‘not cause of concern’, Budget chief says

MANILA, Philippines – Budget Secretary Benjamin Diokno on Tuesday assured the public that the weakening of the Philippine peso should not be a cause of concern.

“The depreciation of peso, as far as I’m concerned, is no cause for concern, we've seen the peso going to 55 [to $1 ] in the past, right?” Diokno said in a televised press briefing.

Diokno said the depreciation of the peso is a result of the strengthening of the dollar more than the weakening of the peso. He explained the dollar is strengthening because of the impending increase in the interest rate by the Federal Reserve System.

“This has been on going for several quarters already and the guessing is that, before the end of the year, the Fed will eventually increase the interest rates so that it is now more attractive for hot money to go back to us. That's basically it,” the budget chief said.

On Monday, the peso-dollar exchange rate closed at P48.25:$1 after hitting its lowest intra-trade day since Sept. 15, 2009, P48.34:$1. This depreciation raised alarm from the public and resulted in assessments that President Rodrigo Duterte’s pronouncements affected the rate change.

“It has nothing to do with the president’s statement. As I said, it is because of the strengthening of the dollar,” he said.

The head of the Department of Budget Management said the winners in the depreciation of the peso are the families of the Overseas Filipino Workers as the value of their remittances got higher and as well as exporters. On the other hand, he said the losers are those who crave for imported goods such as shoes and bags.

Diokno also allayed fears of higher inflation, saying the country has already reached the target inflation of two to four percent.