NEDA Says That Sharp Peso Swings Are More Crucial to the Economy

According to the National Economic and Development Authority (NEDA), sharp peso swings are more important than the actual value of the peso or whether it is stronger or weaker.

NEDA Secretary Arsenio M. Balisacan has mentioned that a predictable and stable foreign exchange is more helpful for both the economy and businesses.

Secretary Balisacan also said that sharp swings in the foreign exchange will sow uncertainty concerning the economy which would, in turn, discourage existing businesses and investors from doing business in the country.

“What is important is (to monitor) the swings. We don’t want that. In investments, we need predictability. The industry will have a difficult time planning if the exchange rate or interest rate (keeps fluctuating),”  says Secretary Balisacan.

“What is important is to ensure that there is stability, predictability,” he adds.

The uncertainty of the US Federal Reserve’s efforts on monetary policy also adds difficulty as Secretary Baliscan says that “it’s anybody’s guess” as to when this money-tightening policy will continue.

“We have to watch for any sharp increases in the exchange rate and be able to do something to prevent such changes,” says Secretary Balisacan.

He also adds that the Philippines’ exchange rate is likewise affected by other national issues like the widening trade deficit. He also cites the global logistics problems as drivers to making imports pricier and causing the trade deficit to increase.

Aside from this, Secretary Balisacan stated that with the Philippines being one of the biggest remittance receivers, this would also affect the foreign exchange rate.

Source: Business Mirror