‘Don’t panic’: Marcos vows to defend Philippine peso after slide to record low - The Straits Times

Jeepney drivers and consumer advocates holding a rally on Sept 30 to protest soaring oil prices that have sunk the peso.

MANILA – President Ferdinand Marcos Jr said on Oct 28 the Philippine authorities would extend their defence of the sinking Philippine peso after the currency hit a fresh record low this week.

“We will continue to do all that we can to make sure that the value of the peso does not continue to go down,” Marcos told reporters a day after meeting central bank and government officials.

“People can take solace in the fact that our policy towards the peso is to continue to defend the peso as hard as we possibly can,” he said.

The Philippine authorities have taken a number of measures to address the impact of a weak currency.

The central bank has raised its key interest rate four times, including a jumbo 50-basis-point hike in September, while Marcos and central bank Governor Eli Remolona have both announced support for the currency.

The nation has also deployed some of its foreign reserves to limit the peso’s decline.

Despite these efforts, the peso has dropped more than 8% against the US dollar, and sank to its most recent record low of 64.20 per US dollar on Oct 27. The currency gained 0.2% on Oct 28 to 64.025.

“Don’t panic,” Marcos told reporters. The currency’s weakness “is an effect of rising prices of oil, and consequently the rising prices of fuel, and its effect on the economy”, he said.

The President’s comments contrast with those he made in March, when he said there were limits to how far the authorities could defend the peso as market forces pushed the US dollar higher.

His more supportive stance may help improve sentiment towards the peso, but it is unlikely to be enough to stem the currency’s weakness, said Jonathan Ravelas, a senior adviser at Reyes Tacandong & Company.

“As long as there is uncertainty arising from the Middle East crisis, the peso will remain under pressure,” he said. “Hopefully, remittances and another 50-basis-point hike by the central bank could slow down the peso’s depreciation.”

Addressing the impact of a weak currency would require both monetary and non-monetary measures in a country that imports nearly all of its oil requirements, and may include more energy-saving steps similar to those implemented in March, Ravelas said.

The government said this week it will provide subsidies and other measures to help its citizens cope with the impact of the El Nino weather pattern and the conflict in the Middle East. These include a price freeze on basic goods until end-2026.

“Inflation is coming from the supply side,” Marcos said. “So monetary measures can only go so far. We have to find other ways” such as working to bring down food prices, he said. BLOOMBERG