National Economic and Development Authority (NEDA) Secretary Arsenio Balisacan highlighted the benefits that the economy could gain from a slightly weaker peso, as he pointed out that the bigger issue is stability in the exchange rate.
Balisacan told reporters a slightly weakening peso could provide some benefits to some sectors of the economy.
“The issue is really more the stability of the peso rather than… if it weakens a bit, that’s not really bad because that would make our exports more competitive. Even the imports substituting industries, for example our bananas, fruits, vegetables that are supposed to compete with imports, they become more attractive. Farmers could earn more from those commodities,” Balisacan said.
“Even for manufacturing, whether they are import substituting or producing for exports, they benefit from the weaker peso,” he added.
The NEDA chief also highlighted that those working overseas will benefit from it, while tourism becomes more competitive.
“Foreigners will be encouraged to come here, since they can get more pesos for their currency,” Balisacan said.
“So, taken as a whole, it creates employment, it creates opportunities,” he added.
The NEDA chief, however, acknowledged its effect on inflation.
“But again, there are ways tempering the effects of those on inflation, that’s what monetary policy makers do. Having said that, I don’t want to see a sharp depreciation because that disrupts planning and business decisions. Stability does not mean flat… you can have it, but manage it properly so that it will not lead to higher inflation,” the NEDA chief said.
“And also, we always say that our debt is not so much foreign concentrated. Only 30 percent of our debt is denominated in foreign currency so it’s not that sensitive (to foreign exchange movements),” he added.
