By Paulo DS. Papa
NAGA CITY---“There is no reason to panic when it comes to the devaluation of peso to the US dollar because the Bangko Sentral ng Pilipinas (BSP) has the proper measure to arrest the phenomenon,” according to Emmanuel Vito Abejero, a social science expert in an interview conducted over the weekend in his office at Ateneo de Naga University.
Abejero pointed that producers should continue to produce will consumers must also continue to spend as necessary, else the market will stand still if everybody panics..
“Normal lang iyan. Kun magpanic kita, an mga negosyante dae na magastos, an mga parabakal dae naman magastos. What will happen to our economy?” (It is normal. If we panic, businessmen will not spend anymore as well as the buyers. What will happen to our economy?), he added.
When asked how will US President’s Donald Trump’s All-American foreign policy and his country’s withdrawal from the Asia Pacific Trade Agreement impact the Philippine economy, the Ateneo professor said weaker countries like the Philippines will be adversely affected. As the result, income of BPO and call center workers, as well as remittances OFWs will be devalued.
He said decreased value of peso versus the US dollar has two effects in the Philippine economy:
1) Exporters and families of Overseas Filipino Workers (OFWs) will have more pesos for every dollar that they get that they will spend on the local market;
2) It will be bad for producers, importers and spenders because they will need more pesos for every dollar.
As of December 2016, the BSP had already updated a monetary policy that prevents the effect of the decreased value of peso to the dollar in the Philippine market by determining if the exchange rate is on appropriate level by looking at the trend in the real Effective Exchange Rate (EER) of the Philippine peso with other foreign currencies.
Since 2014, the BSP has replaced its old effective exchange rate to a new official EER that enables the BSP to look objectively at the exchange rate of pesos vis-à-vis other foreign currencies.
Abejero warned that if we panic because of the devalued peso over dollar, there will be more possibility that we will lessen our productivity and further diminish our economy.
“Our GDP growth rate last year was 6.8%; if we panic the more you we suffer,” he said.