Finance Secretary Carlos Dominguez III said a “slightly devalued” peso will be good for families of overseas Filipino workers and the business process outsourcing sector.
“A lot of these movement in currency is really dictated from abroad. It is not so much what we are doing or what we are not doing. The US is the one that’s changed their interest rates. They just raised it one more time recently, [and it] looks like they might do another one within the year,” Dominguez told reporters over the weekend.
“For the economy, is it really bad to have a currency that is slightly undervalued? Just think how much more pesos are coming from both BPO and the OFWs. That is more than $50 billion a year from both of them,” Dominguez said.
Remittances hit a record $26.9 billion in 2016, or 5 percent higher than the 2015 level. It accounted for around 10 percent of GDP last year.
Remittances and BPO receipts together accounted for around $50 billion annually and supported the country’s external position.
The Bangko Sentral ng Pilipinas expects remittances to reach $28 billion this year, on sustained demand for skilled Filipino workers abroad.
“Some people are not gonna like it but I think the majority are going to benefit,” Dominguez said.
“But you know the important thing is there are no momentum on gains in the peso. That is why it is a free float, it moves up it moves down,” he said.
The peso closed at 50.47 against the US dollar Friday, after hitting a 10-year low of 50.53 on Thursday, as investors sought the safety of the greenback amid Fed rate hike jitters and the International Monetary Fund’s slower growth outlook on the US economy.
The IMF revised its 2017 GDP growth forecast for the US from 2.3 percent to 2.1 percent, citing the inability of the administration of President Donald Trump to implement its economic policies.
