The Finance Department said Wednesday it expects the peso to remain stable this year despite the uncertainties in the global financial markets.
The agency said in an economic bulletin the local currency was one of the seven Asian currencies that appreciated in the first month of 2019.
It said the peso appreciated 0.73 percent to P52.17 a dollar in January from P52.56 a dollar in the previous month. On average, 12 Asian currencies appreciated 0.79 percent.
“The Philippine peso continues to move in tandem with 12 Asian currencies and is one of the least volatile currencies in the world’s fastest-growing region,” the DoF said.
“The Philippine peso continues to be one of the more stable Asian currencies despite the uncertainties in the world market brought about by the normalization of Fed monetary policy, Brexit, volatile fuel prices and US-China trade war,” the DoF said.
It said the Bangko Sentral ng Pilipinas also had to raise policy rates to counter inflationary pressures due to the drop in agricultural production and geopolitical issues that pushed petroleum price to its highest level in four years.
The Philippine peso depreciated 5.4 percent in 2018 and ranked fourth among 12 Asian currencies in a region where the average depreciation was 3.03 percent.
“The Philippine peso is also among the least volatile with a coefficient of variation at 0.32 percent YTD, tying with South Korean won as the third least volatile currency,” the DoF said.
The coefficient of variation of the peso was recorded at 1.91 percent in 2018, ranking seventh among 12 currencies.
First Metro Investment Corp., the investment banking arm of the Metrobank Group, said earlier the peso depreciation would have a positive impact on the economy both in the short and medium terms.
The economists said the peso appreciated 4.6 percent from 2004 to June 13, 2018, while Indonesia and Vietnam had large cumulative depreciation in excess of 40 percent during the same period. Malaysia also showed net depreciation during the period.
“Peso depreciation also has positive effects on the country. The most obvious effect of this would be to discourage imports and produce more exports, thus, reducing the trade deficits over the medium term. And because of the increase in production locally, it will boost employment generation,” they said.
The second positive effect is that it will give a boost to the peso income of OFW families, exporters and those that supply raw materials to exporters, they said.
“There are about 10 million OFWs, and with an average family size of 4.6, the peso slide benefits some 46 million Filipinos. Add to that the number of families dependent on exports, which account for 30 percent of GDP, plus those that supply raw materials to exporters, we can easily conclude that a vast majority of Filipino families benefit from the higher peso-dollar exchange rate,” the economists said.