How volatile is PHL exchange rate? Economists split
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HE recent strengthening of the peso against the US dollar on Monday highlighted the volatility of the country’s exchange rate compared to a year ago, according to local economists. The peso strengthened against the dollar at P54.95 after only three days of closing at the P55 level. The peso opened at P55.31 to the dollar and traded at its strongest at P54.95 and its weakest at P55.32 to the greenback. Unionbank Chief Economist Ruben Carlo O. Asuncion said year-todate, the peso-dollar exchange rate
has appreciated about 1.2 percent and depreciated about 1.2 percent for February. “You are very correct in saying that the USD-PHP has been quite volatile, especially this month. One dominant reason that I see for this USD-PHP short-run behavior has been the responses of the US Fed and offshore markets—fixed-income, equities and forex—toward inflation and inflation expectations,” Asuncion explained. However, Ateneo de Manila University John Gokongwei School of Management Dean Luis F.
Dumlao said while the exchange rate has been “twice as volatile compared to the same month last year,” the volatility in the exchange rate was still normal Dumlao said January was more volatile. In the last 12 months, volatility as measured by standard deviation was most volatile in June 2022 at 0.88 compared to 0.45 this February. “I expect it to be just as normal unless an unexpected significant event happens,” Dumlao said. “[These events include] geopolitical shocks, natural catastrophes, etc.”
Mea nwhi le, A suncion sa id other factors that have affected the exchange rate include the response of the Bangko Sentral ng Pilipinas (BSP) and local markets to investment sentiments from external markets as well as domestic inflation. One factor affecting the external environment, Asuncion said, is the certainty of a recession. He said the question among experts is when the recession will happen and whether it will be a soft or a hard landing. See “Exchange rate,” A2
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JAN BOP SURPLUS HITS $3.1B, A FIRST IN 9 MOS w
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By Cai U. Ordinario
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GCG backs giving 25% of MIF profit for the poor
@caiordinario
HE country’s balance of payments (BOP) position improved and posted a surplus for the first time in nine months, according to the Bangko Sentral ng Pilipinas (BSP). The country posted a BOP surplus of $3.1 billion in January 2023, a reversal from the $102-million BOP deficit recorded in the same month last year. The surplus in January was the highest surplus recorded by the country in more than two years or since December 2020. “The BOP surplus in January 2023 reflected inflows arising mainly from the National Government’s [NG] net foreign currency deposits with the BSP, which include proceeds from its issuance of ROP Global Bonds, and net income from the BSP’s investments abroad,” the BSP said. Rizal Commercial Banking Corporation (RCBC) Chief Economist Michael Ricafort said this was also helped by the improvement in the government’s net income from investments abroad. This was due to the gains in the US/global financial markets during the month amid the China economic reopening narrative since December 2022. He added that another factor was the recent narrowing of the trade deficit/net imports to the narrowest in nearly a year recently. “The prices of imported oil and other imported commodities also corrected low in recent months amid risk of US recession after aggressive Fed rate hikes earlier in 2022,” Ricafort said.
GIR back at $100B
MEANWHILE, this improvement in the BOP position led to an increase in the country’s Gross International Reserves (GIR) and led it back to the $100-billion level at the end of January. The GIR reached $100.7 billion as of end-January 2023 from $96.1 billion as of the end of December 2022. The latest GIR level, BSP said, represented a more than adequate external liquidity buffer equivalent to 7.6 months’ worth of imports of goods and payments of services and primary income.
By Jasper Emmanuel Y. Arcalas @jearcalas
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BIGGEST GREENHOUSE Manny V. Pangilinan (center), Metro Pacific Investment Corp., chairman, is joined by (from left) Israeli Ambassador to the Philippines Ilan Fluss; Ami Lustig, cofounder and CEO of Israel’s LR Group; Jovy Hernandez, Metro Pacific Agro Ventures CEO; and Ilan Weiss, chairman and executive director of Innovative Agro Industry, at the groundbreaking to announce the tieup between Metro Pacific Agro Ventures and LR Group to build the Metro Pacific Fresh Farms on a 22-hectare property in San Rafael, Bulacan. The MP Fresh Farms will be the biggest greenhouse in the country that will use innovative technology to grow fresh veggies to be sold to groceries, supermarkets and local talipapa. Story in Companies, B1. BERNARD TESTA
HE Governance Commission for GOCC (GCG) on Monday backed the inclusion of a provision in the Senate’s version of the Maharlika Investment Fund (MIF) that would mandate allocating at least 25 percent of the net profits of the proposed sovereign wealth fund for poverty alleviation programs. GCG reiterated that it supports Congress’s efforts in ensuring the country’s “economic transformation, growth and sustainability.” “The GCG, therefore, supports the inclusion of the provision in SB No. 1670 providing at least 25 percent of the net profits of the MIC [Maharlika Investment Corp.] to families living below the poverty threshold,” it said in a statement. The GCG also emphasized that the MIC, which shall oversee the management of the MIF, will be within its purview since it bears attributes of an ordinary Government-Owned or -Controlled Corp. (GOCC). “The Governance Commission noted that the MIC bears the attributes of a Government-Owned or -Controlled Corporation [GOCC] such as its charter, functions relating to public needs, and state ownership,” it said. See “GCG,” A2
PHL TO PARTICIPATE IN WORLD EXPO 2025–FRASCO By Ma. Stella F. Arnaldo
@akosistellaBM Special to the BusinessMirror
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HE Philippines will be putting its best foot forward as it participates in the World Expo 2025 in Osaka, Kansai in Japan. Tourism Secretary Christina Garcia Frasco made the announcement on Saturday, at the opening of the two-day Japan Fiesta 2023, underscoring the country’s desire to further strengthen its ties with Japan. The Philippines’s participation in the next world expo from April 13 to October 13, 2025, “will show the best of the Filipino people,” she stressed. The Philippines also participated
in the last World Expo, which was held in Dubai from October 1, 2021 to March 3, 2022. Held at the Glorietta Activity Center and Palm Drive Activity Center in Makati, Japan Fiesta 2023 was organized by the Embassy of Japan, Japan National Tourism Organization (JNTO), Japan Foundation Manila, Japanese Chamber of Commerce and Industry of the Philippines Inc. (JCCIP), and Japanese Association Manila Inc., collectively known as the Japanese Fiesta Council. Japan’s Ambassador to Manila Koshikawa Kazuhiko described the event as a “joyous celebration,” where visitors were able to have “an authentic experience of Japan right in the heart of Makati.”
He added, “I am delighted that Filipinos are becoming more interested in Japanese culture and using their ingenuity to make it their own, thus creating a unique blend of both our cultures.” For her part, Frasco confessed to being a fan of Japan products, like many Filipinos. “I myself am a huge fan of sashimi, sake, and sakura. And through this Japan Fiesta, you’re giving our fellow Filipinos an opportunity to take a peek into the window of Japan, and hopefully, visit your beautiful country. This mutual relationship, we hope to be able to develop in the next few years through the help of our good Ambassador.” See “PHL,” A2
See “BOP surplus,” A2
PESO EXCHANGE RATES n US 55.2520 n JAPAN 0.4114 n UK 66.4682 n HK 7.0436 n CHINA 8.0471 n SINGAPORE 41.3408 n AUSTRALIA 37.9305 n EU 59.0533 n KOREA 0.0427 n SAUDI ARABIA 14.7319 Source: BSP (February 20, 2023)