Senator Win Gatchalian is calling for calm amid anxiety concerning the recent depreciation of the Philippine Peso against the U.S. Dollar, explaining that the phenomenon could be attributed to natural market forces responding to the ongoing recovery of Western financial markets.
“The depreciated value of the peso against the dollar does not in any way indicate diminishing economic prospects for the Philippine market. There is no need for panic,” said Gatchalian, Chairman of the Senate Committee on Economic Affairs.
Gatchalian, who specialized in corporate finance and management before entering public service, referred to the phenomenon as an “outflow of hot money” which had been parked in the Philippine economy by foreign investors wary of the sluggish performance of the American economy, as well as the potential fallout in European markets after the controversial Brexit episode.
However, with promising signs of recovery and greater stability in Europe, as well as a long-awaited interest rate hike expected from the U.S. Federal Reserve, foreign investors exchanged their pesos for dollars to re-invest their money in the recovering developed Western markets.
“The outflow of money from Philippine markets lowered the demand of the peso, thus pushing down its market value in the international foreign exchange market,” Gatchalian said.
Far from anxious, Gatchalian noted that the depreciated value of the peso could actually help boost the Philippine exports trade by making prices more competitive.
“Instead of allowing anxiety to run rampant, let us make a concerted effort to use these developments to our advantage by implementing a coordinated policy to strengthen our exports sector,” said Gatchalian.