Peso gets strongerBy Randell Tiongson on September 4th, 2010
The peso closed at 44.69 to 1 US Dollar yesterday as per the official government rate (PDS). Our currency gets stronger and stronger and my fearless forecast is that it will even be stronger in the coming months as remittances from our OFW’s will start to increase as per tradition during the ‘ber’ months.
The big question is, will this really be good for our economy? A stronger currency is appreciated by many as it generally affects many prices, especially in an import heavy country like the Philippines. On the other hand, it also means that the spending power of the remittances being sent home declines. Further, the appreciation of our peso makes our exports more expensive and affects the revenues of our exporters.
It is a tricky balance coming up with a foreign exchange rate that benefits everyone. However, these are economic realities we all need to face and accept. Government interventions will not really work in the long run, hence doing so is futile in my opinion.
The long term position of our currency will really be dependent on two things, the way we manage our economy and the way the U.S. manages theirs.