Diokno contradicts Duterte: No US manipulation of PH peso

MANILA, Philippines – Budget Secretary Benjamin Diokno on Wednesday, September 28, debunked a claim made by his boss President Rodrigo Duterte that the US was behind the manipulation of the Philippine peso, now Southeast Asia's weakest currency.

Diokno said the weakening of the peso is a "rational behavior" of investors caused by the looming increase of interest rates by the US Federal Reserve.

"Ang paghina ng piso actually ay dahil lumalakas ang dolyar dahil malapit nang i-adjust ng Fed 'yung interest rates sa US," Diokno told reporters after he was confirmed by the Commission on Appointments

(The weakening of the peso is actually due to the strengthening dollar because the US Fed is about to adjust interest rates.)

"So 'yung mga tinatawag na portfolio investment or commonly called hot money na naglalaro sa stock market natin, lumalabas na sa atin," he added.

(So portfolio investments, commonly called hot money in the stock market, are now going out of our country.)

Amid reports of peso depreciation against the US dollar partly due to political risks, Duterte said the US was "undermining" the local currency and that it is manipulating the peso's value, which reached a 7-year low last Monday, September 26.

But Diokno said this is not the case. "No, hindi naman. Natural na, it's a rational behavior of short-term investors kung saan malaki 'yung kita ng pera nila, siyempre ini-invest muna nila doon," he said.

(No, it's not. It's natural, rational behavior of short-term investors that wherever their money will grow, they will invest money there.)

Since the US Fed is set to increase interest rates, Diokno said investors would choose to put their money there.

"Ngayon ang nakikita nila na babalik na, 'yung gumaganda na 'yung ekonomiya sa Estados Unidos, tumataas na interest rates, bumabalik na sila doon. This is not only happening here, but worldwide," he said. 

(Now that they're seeing that the economy of the US is getting stronger, with high interest rates, they're going back there. This is not only happening here, but worldwide.)

Poorest performer

Diwa Guinigundo, deputy governor of the Bangko Sentral ng Pilipinas, said negative investor sentiments and external shocks have made the peso the poorest performing currency in the region.

Guinigundo told a forum organized by the Stratbase-Albert del Rosario Institute that "the stock market is dropping and the exchange rate is moving preceptiously down such that we are now the worst performing currency in the region."

He stressed however that "our fundamentals have not changed, our fundamentals have not moved one way or another."

Philippine equities continued to bleed Tuesday, September 27, on foreign selling, failing to join the regional rally over a perceived win by Hillary Clinton in the US presidential debate.

Senate Minority Leader Ralph Recto, for his part, urged the President to carefully choose his words, as these affect the economy. (READ: Recto to Duterte: Strong words can scare investors)

While the senator agreed the US Fed is the main reason for changes in local currency, Recto said the depreciation is "exacerbated" because of the Philippine government's inconsistent "pronouncements."

Duterte said his mouth would not bring the country down– Rappler.com

Camille Elemia

Camille Elemia is Rappler's lead reporter for media, disinformation, and democracy. She won an ILO award in 2017. She received the prestigious Fulbright-Hubert Humphrey fellowship in 2019, allowing her to further study media and politics in the US. Email camille.elemia@rappler.com

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