TRADE SECRETARY Ramon M. Lopez said the current strength of the peso is challenging for the export sector, and added that the currency could do with some weakening, calling P50 to the dollar a “balanced” valuation which will satisfy exporters while still enabling the surge in imports that will come with the economic recovery.
Speaking to CNBC Asia on Friday, Mr. Lopez said: “I think it will somehow find a better balance and hopefully back to the P50 level where we were before and that will be well for the export sector.”
“We expect with the rebound of the economy, since we are an import dependent country (bringing in oil and to many others), we expect that once the economy picks up much faster, imports will come in,” he said.
He added that such a surge in imports will generate demand for foreign currency, noting that trade volumes will rise with the signing of the 15-country trade deal Regional Comprehensive Economic Partnership.
Fitch Solutions Country Risk and Industry Research said that the peso outperformed in 2020, strengthening 5.3% in the year to date against 3.6% for the Asian Dollar Index, due to weak import demand and strong external fundamentals.
Fitch forecasts the peso to average P47.5 this year. The peso closed at P48.065 to the dollar on Friday, against P48.07 Thursday.
The peso “remains a challenge, obviously exporters would want to have a slightly weaker Philippine currency,” Mr. Lopez said.
The trade deficit of $1.73 billion in November was the narrowest since June. — Jenina P. Ibañez