“It’s the forces of the market. The dollar goes very, very strong because [the US economy is] recovering … But when Trump becomes the president, he starts to do things, you can be sure that… the peso will rise again,” Mr. Duterte said in a televised interview with Rappler on Dec. 29.
PRESIDENT Rodrigo R. Duterte is confident that “the peso will rise again” even though traders expect the local unit to break the P50-a-dollar level in 2017 after the Federal Reserve signaled two to three rate hikes this year.
The chief executive was responding to a question about the depreciating peso, which ended at P49.72 in the final trading session of 2016, nine-and-a-half centavos stronger than its finish of P49.815 to the dollar in Wednesday’s session.
Sought for comment on the President’s statement, University of Asia and the Pacific Senior Economist Cid L. Terosa said in a text message that Mr. Duterte is “echoing the popular idea that the depreciation of the peso is the handiwork of external events rather than a result of the internal weakness of the economy.”
“The gradual recovery of the US economy coupled with the rise of interest rates in the US and the strong commitment of Trump to reclaim the economic glory the US economy have made investing in the US economy an attractive option for investors seeking safe, guaranteed, and higher returns,” Mr. Terosa explained.
The Philippines’ financial markets ended 2016 weaker than their 2015 finish, with the Philippine Stock Exchange index (PSEi) extending its losing streak for a second year.
Analysts and economists partly attributed the weakness of the financial markets to Mr. Duterte’s pronouncements that included threats of severing ties with political and economic partners the United States and the European Union.
Meanwhile, Donald J. Trump’s surprise win in November delivered the knockout blow to the PSEi. The dollar strengthened amid expectations that the president-elect would follow through on his campaign promises of higher spending and tax cuts to boost the economy, spurring a new round of interest rate hikes from the Federal Reserve.
In December, the Development Budget Coordination Committee (DBCC) retained most macroeconomic assumptions for national budget planning purposes, tweaking only foreign exchange and some merchandise trade projections to reflect pressures from uncertainties abroad.
For his part, BSP Governor Amando M. Tetangco, Jr. said in November that the Philippine economy is poised to remain in growth mode in the next few years on the back of sound policies and sufficient buffers against external shocks. — Ian Nicolas P. Cigaral