The Philippine Chamber of Commerce and Industry wants the Marcos administration to act on the peso’s further depreciation against the US dollar.
“The depreciation of our currency. Definitely… everything that we import, especially on food-related staple items,” PCCI president George Barcelon told ANC’s “Headstart” when asked what the government should act on.
“So, the government should try to mitigate that in a sense that supply should be made available. Those we do not produce enough, the importation should be more open,” added the chief of the country’s biggest local business group.
The local currency finished the day’s trade at 58.935 after ending the previous session again at its record-low of 59.00 to a dollar, the third time it finished at this level to date.
It opened the day at 58.97, sideways from its 58.9 start on Thursday.
It traded between 58.88 and 58.985, resulting in an average of 58.931.
Volume reached $542.8 million, higher than the previous day’s USD524.08 million.
Barcelon warned the shortage of raw items may drive up prices, especially as the holiday season is around the corner.
“We continuously communicate with the key Cabinet secretaries… and we share with them some input that we see because we have more visibility on the ground,” he said.
Several analysts have agreed the P60 to $1 level is possible, but the currency is also poised to gain from the uptick in remittances during the holidays.
About 4 in 10 Filipinos disapproved of the Marcos administration’s efforts to tame inflation, according to a recent Pulse Asia survey.
Inflation emerged as the top urgent national concern in the poll.
Inflation quickened to 6.9 percent in September, government data showed.
Higher price movements of food and non-alcoholic beverages were among the causes of this last month’s inflation spike, the Philippine Statistics Authority has said.
Rizal Commercial Banking Corporation (RCBC) chief economist Michael Ricafort said the local currency gained after a two-day slide due to the correction of the greenback, which he traced to the higher-than-expected September inflation rate in the US at 8.2 percent.
Although the latest inflation print in the US is a deceleration from the previous month’s 8.3 percent, it is still among the highest in more than 40 years or since January 1982, he said.
“Nevertheless, the US dollar/peso exchange rate continued to stabilize for the third straight week at below the 59.00 psychological mark after BSP (Bangko Sentral ng Pilipinas) Governor (Felipe) Medalla signaled possible large local policy rate hike of +0.50 or +0.75 on the next rate-setting meeting on November 17, 2022, in an effort to reduce the pressure on the peso and also cool inflation as this could impact on economic recovery,” he added.
Ricafort said Medalla “also signaled a combination of measures, such as using international reserves, raising rates, and, if possible, some form of international cooperation.”
He said these positive factors got a further boost after the Bankers Association of the Philippines (BAP) vowed to continue working with the central bank to fight speculative activities to ensure orderly market operations.
“The peso also became stronger after Department of Finance Secretary (Benjamin) Diokno signaled plans by the Marcos administration to extend the lower tariff rates on key commodities, such as pork, corn, rice, and coal, to 2023, as part of the government’s effort to curb higher prices/inflation especially on food,” he said.
The rise of the local bourse’s main index for the fourth consecutive day on Friday also contributed to the peso’s improvement, he said.
“Global market sentiment is also supported by slightly slower-than-expected China inflation data and UK officials working on a reversal on UK Prime Minister Truss’ tax-cut plan,” he added.
Ricafort said the local currency has weakened by 15.6 percent or around PHP7.936 against the US dollar compared to its PHP50.999 close in end 2021.
He said the peso’s immediate resistance level is 59.00 while immediate support level is between 58.50-58.75.