Keep peso at the range of P49 to P50 per dollar



By Rose de la Cruz


Rep. Frederick Siao, lone district of Iligan, is asking the economic managers, the Bangko Sentral ng Pilipinas and the Bankers Association of the Philippines to map out strategies to keep the peso from further falling against the dollar and if possible to keep it at the range of P49 to P50 per $1, from its current rate above P52.


He said that the only effective cushion of our country against high world oil prices is a strong peso.


As Member of the House Committee on Economic Affairs, he appealed to the economic managers of President Rodrigo Roa Duterte, BSP officials and the BAP to map out a common strategy to keep the peso from depreciating too much against the US dollar and bring inflation under four percent and closer to three percent. “We need a slightly stronger and stable peso,” he said.


BSP data showed the peso-dollar volatility has worsened from negative 2.43 in 2015 to negative 4.19 in 2016 and then to negative 5.78 in 2017.


This depreciation may be too much. The first five months of 2018 are nearly over and the peso-dollar rate is still at above P52.00:US$1.00.


If the fluctuation worsens to between negative 6 to negative 7, we could have a peso-dollar rate in the range of P53 to P 55 to the dollar and with that too many Filipinos would suffer from expensive imported oil and its consequent impact on fuel prices and Filipino household finances, he explained.


He suggested to the economic managers and the bankers is to find ways to bring back the peso-dollar rate to aroundP50 to $1 over the next several months and possibly within the range of P49 to P50 per dollar in 2019. Those levels will ease the financial pain Filipino families will endure because of high fuel prices and rising inflation.


Top officials of the BSP and the banking community are “more expert than I on monetary and fiscal policies. They have a wide range of tools ranging from moral suasion to mopping up excess liquidity to occasional intervention in the forex market when the exchange rate fluctuates wildly, and even more forceful tools in their arsenal. That is the range, but there is no need for extreme measures because we are far from a forex crisis.”


What are needed are calibrated, carefully measured actions with anticipated time lag in terms of full effects.


We can also remove excess money from the market—thereby easing inflation pressures—by convincing Filipino families and businesses to invest and to save and to do that now. Let us give them more reason to invest in treasury bills, treasury bonds, private corporate bonds, real estate, condominiums, and other investment assets. Let us give them more reason to save their money in banks, he urged.


His role as legislator, he said, is to remind them of the bigger picture, the socio-political context within which monetary and fiscal policies are implemented. Economic policy-making cannot happen in a vacuum or isolated from the larger context.

 Months Ahead 

 If fuel prices rise too much when world oil prices return to $100 per barrel as some oil industry analysts have not discounted or have deemed possible in the months ahead, it may become necessary for our national government to expand the 4Ps to include middle-income families.

It is possible and it may become necessary, unless remedial measures are put in place in the weeks ahead, to include not just the poorest of the poor among the 4Ps recipients, but also the households with income of up to P30,000 per month, he said.


This option may not be far-fetched.


Inflation, local fuel prices, and the peso-dollar rate could even become crucial election issues when the election season sets in November 2018 to January 2019.



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Thursday, 18 October 2018
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