Philippine peso sinking to P58 vs $1 'unlikely' – Diokno
MANILA, Philippines – Budget Secretary Benjamin Diokno said it is highly "unlikely" that the Philippine peso will sink further to P58 against the United States dollar.
In a media briefing on Wednesday, September 18, Diokno said the forecast of London-based research firm Capital Economics is "totally unfounded."
"The fear that our peso to dollar [exchange rate will be] at P58 is totally unfounded. That's unlikely," he said.
The budget secretary downplayed the forecast, saying it could only happen if, for instance, tourism arrival figures sink due to fatal viral diseases.
"You can always come up with a scenario that nobody will go to the Philippines, like SARS. If so, then nobody will go here. But why scare ourselves? We are in a good shape right now," he added.
The country's trade deficit swelled by 171.7% to $3.55 billion in July 2018, a huge leap from the $1.31 billion recorded in the same month last year. The trade deficit is at $22.49 billion year-to-date, 72.3% wider than the $13.06 billion recorded during the same period last year.
A trade deficit occurs when a country's imports exceed exports. A wide trade gap puts pressure and weakens a currency.
Diokno acknowledged that the country's current account deficit went down because of the massive infrastructure push, but also said that remittances from overseas Filipino workers (OFWs) continue to keep the economy steady.
"Our current account deficit went down because we are building. We are expanding our economy so that our capacity also increases. We can still rely [on] our OFWs, [the remittances] actually increased. That is still reliable," Diokno said.
"BPO (business process outsourcing) companies are still reliable, as well as foreign direct investments," he added.
OFW remittances for the month of July hit $2.401 billion, or a 5.2% increase from last year's figures, according to the Bangko Sentral ng Pilipinas (BSP). The amount is $44 million higher than June's $2.357 billion.
Long-term equity investments from overseas amounted to net inflows of $5.755 billion, a 42.4% increase from $4 billion last year, despite economic woes.
Inflation or the increase in the prices of goods climbed to another 9-year high, hitting 6.4% in August. – Rappler.com