Strong fundamentals keep peso stable – DOF
Elijah Felice Rosales (The Philippine Star) – July 19, 2021 – 12:00 am
MANILA, Philippines – The peso can survive the currency devastation caused by the monetary impact of the pandemic, due to the country’s strong fundamentals, a senior finance official said.
Undersecretary of Finance and chief economist Gil Beltran said, however, more needs to be done to ensure that investors maintain their interest in the Philippines and that the local currency remains floating.
“Strong fundamentals support the relative stability of the peso. By the end of May, for example, the country’s reserves of $ 107.25 billion could cover more than a year of imports, ”Beltran said in an economic bulletin.
Gross international reserves, which serve as a buffer the economy can use in the event of external shocks, fell to $ 106.08 billion at the end of June, from $ 107.25 billion.
The Bangko Sentral ng Pilipinas (BSP) attributed the drop to increased government spending to fund its pandemic response efforts.
Beltran said the government should improve its handling of the pandemic, including its finances, to force investors to keep their business here, if not attract new projects.
“Prudent macroeconomic management, containing the spread of the virus and intensifying the vaccination program, (as well as) the safe reopening of the economy will be important to maintain investor confidence in the country in this time of pandemic”, he declared.
Based on BSP records, foreign direct investment (FDI) in the country doubled to $ 679 million in April, from $ 317 million in the same month last year.
Thus, FDI recorded in the Philippines increased by more than half to reach 3.05 billion dollars at the end of April, against 1.95 billion dollars during the same period in 2020. In addition, the BSP expects to what capital inflows prolong a recovery on optimism that the economy will rebound. of the recession.
Beltran said the peso, like other currencies in Asia, would experience declines due to volatility in the international market. The peso depreciated 1.05% against the US dollar in the first half of the year, but retained its position as one of the region’s four strongest currencies.
“The volatility of many currencies increased in 2020 due to the pandemic, but the peso has remained among the most stable currencies, ranking next to the Thai baht,” Beltran said.
The peso weakened on Friday to 50.235 against the dollar from 50.22 P on Thursday.