Peso’s weakening won’t lead to foreign exchange crisis: Espenilla

August 25, 2017

The Bangko Sentral ng Pilipinas on Friday said the Philippines  is unlikely to face a currency crisis despite  the peso's recent weakening.

“Definitely we are not in a foreign exchange crisis. We allowed the peso to adjust moderately and gradually,”  BSP Governor Nestor Espenilla Jr., told reporters in a forum organized by Economic Journalists Association of the Philippines.

“We allowed the peso to adjust moderately and gradually. But I can assure the BSP is in full control of the exchange rate. And this is consistent in an investment and export led strategy,” he added.

Espenilla said the Philippine economy’s fundamentals are very strong and the government will see the peso stable in the medium term.

“We’ve always said that while the peso is market-determined the BSP is carefully monitoring developments and will take necessary actions when things go out of hand. We’re always watching the market,” he said.

Espenilla said the peso depreciation has been relatively moderate — about two-and-a-half percent depreciation year-to-date from the beginning of the year.

“It’s gradual but it’s also consistent since the government is also pushing for investments and export-led economic growth, which is actually sustainable,” he said.

“A moderate weakening of the peso is actually is supportive of exporters, of overseas workers, BPO, (and) tourism. So there are positive things there. At the same time, a moderate weakening of the peso also helps dampen consumption,” Espenilla said.

“You know the economy today is growing fast but consumption is also a major part of the driver. So there is a need to rebalance it so they actually are riding on investments and exports growth. So this is all part of the adjustment process to promote sustainable economic development,” Espenilla said.

In the first semester, the economy grew by 6.4 percent from last year’s 7 percent.

The government is eyeing GDP growth of between 6.5 percent and 7.5 percent this year, and seven percent to eight percent from 2018 to 2022. DMS