Diokno: Peso weakness a 'net win'
MANILA, Philippines — The weakening of the Philippine peso, one of Asia’s worst performing currencies so far this year, is a “net win” for the country, Budget Secretary Benjamin Diokno said Tuesday amid concerns over the local currency’s slump.
According to Diokno, the depreciation of the peso is expected to benefit overseas Filipino workers, the business process outsourcing industry and the country’s exports.
“A weak peso does not mean a weak economy,” Diokno told ANC’s “Headstart.”
Philippine President Rodrigo Duterte’s plan to keep his country’s growth engine humming by spending more than P8 trillion on infrastructure has been fueling demand for imports of construction-related goods.
The heightened purchase of capital goods overseas due to the infrastructure boom has reversed the country’s current account surplus to a deficit, pressuring the peso.
The Philippines’ trade deficit in May rose to a five-month high of $3.70 billion driven by double-digit growth in imports. However, exports fell for a fifth consecutive month in May.
Meanwhile, remittances in the first four months of 2018 hit $9.353 billion, 3.5 percent more than the $9.036-billion inflows received in the same period in 2017 but below the central bank’s 4 percent growth projection for this year.
Export revenues in BPO services grew 7.5 percent to $5.5 billion in the first three months of 2018 from 9.9 percent in the first quarter last year.
The peso on Tuesday closed P53.46 against the greenback, weaker than its P53.4-per-dollar finish last Monday. Year-to-date, the local unit has depreciated by more than 7 percent against the US dollar.
Some economists believe rising inflation, which jumped 5.2 percent in June, cancels out any gains from a weaker peso by eroding consumers’ purchasing power. — Ian Nicolas Cigaral
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