“outperforming its regional peers.” I have a basic discomfort with statements like this, because the economist in me knows that a currency rising in value yields both winners and losers. I studiously avoid using the words “strong” or “strengthening” for the appreciating peso, or describing it as “outperforming” other currencies, because of the misleading notion these convey. A falling peso-dollar exchange rate is both good news and bad, depending on who is affected.
But note that our exports have been falling steeply since March. Foreign tourism is all but dead since the COVID-19 pandemic began, and foreign direct investments have slid for the fourth year in a row. Foreign portfolio investments have been on a net outflow since last year, intensifying in recent months. While OFW remittances started rising again in June and July, it is still down 2.4 percent over the first seven months of the year due to three months of successive decline before that.
The supply and demand story thus easily explains why the dollar is getting cheaper lately in terms of pesos — and it’s more due to weak demand in a depressed economy. This appreciation of the peso benefits some, and hurts some. Obvious gainers are consumers of imports and import-dependent products, as peso costs for every dollar’s worth of imports go down. Outgoing Filipino tourists also benefit, as it becomes even cheaper to visit Seoul or Singapore as against Bohol or Boracay.
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