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Salceda Sees Peso Could Depreciate to 68 Pesos to One Dollar

Salceda Sees Peso Could Depreciate to 68 Pesos to One Dollar

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Surgery by Nathaniel Cajuday

In a statement issued last September 23, 2022, Albay 2nd District Representative Joey Salceda confirmed that there is no opposition to the US dollar.

Based on the findings used by the US central bank in its fight against inflation forty years ago, Salceda said it is inevitable to stop the free fall of the peso between ₱65 and 68 per US dollar in the near future. Neither the current administration nor the Banko Sentral ng Pilipinas (BSP) can do anything about it.

“There is no resistance. There is no anchor, so to speak. So I see the dollar maintaining its strength against the peso. It will continue. This could go as high as P65 to P68 per dollar. And frankly, there is not much we can do.” ways and means of the House of Representatives, President Salceda explained.

Economist Solon also presented the country’s recent historical accounts of periods when the Philippine currency depreciated and depreciated by an average of 38 percent.

“The 41 percent decline in the early 1970s even led to a possible increase in Philippine exports by 1974. Depending on where you start counting, PHP has depreciated between 18 and 23 percent against the dollar during this period of weakness. So if history repeats itself, there is still a long way to go, Salceda explained.

According to the Bicolano lawmaker, the BSP cannot sustain the local interest rate differential with the US.

“We cannot raise interest rates too aggressively without compromising economic recovery, because the weakening of the currency is not primarily our fault. There is not much we can do to protect the peso. What we can do instead, as I’ve said repeatedly this year, is that if the dollar is stronger than the peso, we’ll just make more dollars. Salceda concluded.

In a recent statement, the committee chair emphasized that a weaker peso hurts the poor more than the rich, adding that “The bottom 30 percent of households spend 58.2 percent of their total expenses on food. And 24.9 percent of the country’s total food consumption is imported.

“So a 25 percent depreciation of the peso will increase their total spending by at least 3.64 percent on food alone due to first-round effects alone. Second-round effects, or the effects of rising import input costs on domestic production, may also put more pressure on household budgets. he added.

Salcedo further explained that the upper 70 percent spend only 39.5 percent of their income on food. Figuring that the same depreciation will only hit them at 2.47 percent of the cost.

When it comes to fuel consumption, fuel accounts for about 30 percent of transportation and energy costs, and the poor spend about 15 percent of their income. Therefore, looking at another 1.13 percent increase in these areas due to the 25 percent peso depreciation that Salcedo said the country is on track to achieve on an annualized basis in the coming weeks

Salcedo offered a possible economic solution that could be a mix of policy and program intervention. He suggested that the government needs to encourage dollar earners employed by the “big four”. Namely, Business Process Outsourcing (BPO), overseas freelancers, Overseas Filipino Workers (OFWs), and the tourism industry.

“Thanks to that, we can benefit from the rise of the dollar. We should train as many people as possible so that they have the opportunity to be employed in these fields. The coming Christmas season might also be a good time for some OFWs to return some of their dollars.” he concluded.

This article was published in BitPinas: Salceda sees peso weakening to 68 pesos to one dollar

Disclaimer: BitPinas articles and its external content are no financial advice. The team delivers independent, unbiased news to provide information on Philippine crypto and beyond.

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