An exchange rate of P41 to P43 to $1 is “tolerable," according to President Benigno Aquino III whose assessment of the behavior of the peso against the dollar comes a week after the exchange rate hit a high of P42.08 on July 27 before closing at P42.11.
The peso-dollar rate settled at P42.23 to $1 Wednesday.
“Exporters will complain, the importers are rejoicing. And the prices of things that are consumed domestically… there should be a positive effect, especially for petroleum, less pesos to buy X number of barrels of oil," Aquino said in an ambush interview
Aquino reiterated that he will meet his economic team to analyze the impact of the United States’ debt problem on the Philippine economy.
They will also look at ways to address the weakening of the US dollar, recognizing that while most Filipinos will gain from cheaper imports, exporters and remittances of overseas Filipinos will get fewer pesos for the dollars they earn.
President Aquino revealed that he is more concerned about the inflation that happens when the country’s financial system gets swamped with excess liquidity, partly because of strong inflows of foreign exchange from investments and earnings from overseas.
He said the creeping inflation the country is not just in the Philippines noting that “inflationary pull is already happening all over the world."
Aquino added that the Bangko Sentral ng Pilipinas (BSP) has raised to reserve requirement to reduce some of the inflation pressures.
The surge in foreign exchange inflows is "extraordinary" according to the Hongkong Shanghai and Banking Corporation, which said the BSP will likely raise the reserve requirement again in its effort to keep inflation below 5 percent for the whole year of 2011. — With Earl Rosero/VS, GMA News