'Rising peso bad for the economy'

Posted at 11/28/2012 3:14 PM | Updated as of 11/29/2012 2:04 AM

MANILA, Philippines - The continuous appreciation of the Philippine peso affects even families who are not dependent on overseas Filipinos' remittances or export-oriented businesses, Socioeconomic Planning Secretary Arsenio Balisacan said Wednesday.

But Balisacan pointed out the implementation of government's major infrastructure projects, especially those under the public-private partnership program, is expected to temper the strength of the local currency.

"It's (peso appreciation) bad for the economy as a whole. When our industries--whether export-oriented or import-oriented--are faced with an appreciating peso, they will lose competitiveness," Balisacan told ANC.

"As a result, employment is threatened so the ordinary Filipino, even if he is not OFW-dependent or engaged in export oriented business, would be hurt," he continued.

The peso broke into the P40-to-$1 territory on Tuesday, driven by positive market sentiment after euro zone officials and the International Monetary Fund reached a deal on reducing Greek debt and by seasonal remittances inflows as Christmas nears.

"It's certainly going to be a major concern... but we are in a better situation to do something about it," Balisacan said.

"The BSP (Bangko Sentral ng Pilipinas) has been doing its part in a very big way and we think they have the capacity to continue maintaining a competitive environment for our local industries," he continued.

Balicasan further said "Once we get the traction to implement all these major infrastructure programs, that should ease the pressure on the peso."

Exporters earlier in the year have expressed concerns on the peso's appreciation as such makes their products less competitive in international markets.

Moreover, the rise of the peso reduces the spending power of OFW-dependent families, and it also affects the competitiveness of the country's business process outsourcing (BPO) industry, a recent driver of growth in the services sector.