PESO TO REMAIN FIRM THROUGH 2008
DAVAO CITY, JANUARY 21, 2008 (STAR) By Edith Regalado — Bangko Sentral ng Pilipinas Deputy Governor Diwa Guinigundo said the peso will continue to appreciate and remain firm through 2008.
“But we cannot tell exactly at what range would the peso continue to appreciate,” Guinigundo told The STAR.
The peso has reached the P40 to a $1 level against the weakening of the American dollar, mainly driven by market forces.
Guinigundo likewise expressed confidence the country would sail well through 2008 even with the impact of a strong peso brought about by the present bad shape of the United States economy.
“We can survive and ride it out. We have already developed a certain level of resiliency. And we also already have an improving macroeconomic fundamentals in place, ” said Gunigundo, who arrived here over the weekend for the Davao leg of the financial literacy campaign for overseas Filipino workers (OFWs).
Gunigundo explained that whatever is currently happening with the US economy that resulted in a stronger peso is beyond the Filipinos.
He admitted though that the Central Bank cannot arrest the current appreciation of the peso and bring it to its former levels.
“But we can temper the volatilities in the peso-dollar exchange rate,” Gunigundo said, adding that government is also cautious in buying more dollars as it would mean loss of the currency’s present value.
The BSP deputy governor stressed that with a stronger peso since 2006, the Central Bank and the national government were able to pay a lot of loans that were yet to mature.
“In 2006, we paid $3.7 billion and in 2007, we paid another $2.5 billion in loans. And in 2008, it would depend on our actual level of debt,” Gunigundo further said.
The BSP official also emphasized that with a firm peso, government will be sourcing its financing more from domestic instead of foreign financial institutions.
“In that way, we would be reducing our need for the dollar to pay our debts,” Gunigundo said.
The situation also resulted in a balance of payment surplus of $8.6 billion in 2007 although the projection for 2008 was pegged at about $3.4 billion surplus.
“The 2008 projection in surplus is a lot less but still it is good enough,” Gunigundo said.
Gunigundo also explained that even if the economy is expected to benefit from the continued strengthening of the peso, there are also losers and winners.
“The OFWs and the exporters are hurting from it but the government is putting in place certain measures to mitigate it,” he told The STAR.
Gunigundo said that the BSP has launched a financial literacy campaign to teach OFWs entrepreneurship and investing in different financial institutions in an effort to help them how to wisely use their hard-earned money.
The financial literacy campaign is in cooperation with the Overseas Workers Welfare Administration (OWWA), the Philippine Deposit Insurance Corp. (PDIC) and other banks.
He said that government has also put up a P280 million export promotion fund to help the country’s exporters who have already felt the pinch of a strong peso.
“But it should also be that our exports put in extra effort in improving their products further and at the same time they should also explore markets other than what they already have,” Gunigundo said.
The export fund shall help improve the exporters’ operations, products and market access.
“We shall help our exporters bring their products to international fairs and exhibits where they could find other possible markets,” Gunigundo said.
Chief News Editor: Sol Jose Vanzi
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