The Philippine peso will not be deliberately made weaker against the US dollar in order to improve the performance of Philipine exports but rather allowed to be determined by the market.
This was the answer of the Bangko Sentral ng Pilipinas (BSP) to pressure from export groups for the BSP intervene in the foreign exchange market, such as to engage heavily in dollar buying, so that the dollar will strengthen and the peso will weaken.
The appreciation of the peso has taken its toll on exporters, with some companies in the brink of closing shop, it was stressed.
In recent months, the peso has appreciated been one of the few currencies in the ASEAN region to outperform the dollar, eroding local exporters’ foreign exchange advantage.
BSP Governor Amando M. Tetangco, Jr. said exporters should not rely on a weak peso but rather find other ways to be more competitive in the international market.
“The exchange rate is not the only determinant of competitiveness,” he said.
He pointed to other factors that may affect export performance. Local manufacturers should look to increasing productivity and cutting on costs, for example. On the part of government, creating a more conducive fiscal environment will help local enterprises do better.
The BSP also said that a weak peso may benefit exporters but may hurt other sectors, especially the importers.
A strong peso will also ease overall inflation rate in the Philippines because it helps make oil and other essential imports cheaper.
Photo: from business.inquirer.net/