MANILA - The peso's weakness to a seven-year low against the dollar should not alarm the public, Budget Secretary Benjamin Diokno said Tuesday.
A weak peso will boost the spending power of overseas Filipino workers' families who rely on dollar remittances. While imports will be more expensive, low oil prices in the world market will likely cushion its impact, Diokno said.
The peso closed at P48.25 on Monday, after touching P48.335, its lowest level since September 15, 2009, intra-day trade, with some analysts attributing the slump to worries over the fallout from President Rodrigo Duterte's tough anti-US rhetoric.
"Let's just be more vigilant, but that should not be cause for alarm," Diokno told DZMM.
"Hindi iyan makakaapekto masyado sa ekonomiya natin. Unang-una, mas gusto pa nga 'yan ng pamilya ng mga OFW para 'yung peso value ng mga ipinapadala sa kanila ng mga kamag-anak na nasa abroad ay mas lumalaki [That will not affect our economy so much. First of all, families of OFWs even favor that because the peso value of their remittances increases]," he said.
The Philippines also has $83 billion in foreign reserves, boosted by $25 billion in annual remittances, he said.
Importers driving demand for dollars shows that the domestic economy is “quite strong,” Divya Davesh, Asia FX strategist at Standard Chartered, told ANC.
“But certainly in the short term, it does take away the buffer, especially during periods of risk aversion or during periods when we see increased outflows from, for instance, equity markets,” Davesh said.
The local currency’s weakness in the past month is also “helpful” with the peso overvalued, he added.