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MANILA — The weakening of the peso against the dollar may likely have–at least for now–a negligible impact on the prices of consumer goods and imported fuel products, and may even benefit Philippine exporters, overseas Filipino workers (OFWs), and outsourcing firms operating in the country.
This was according to Trade Secretary Ramon Lopez who noted that the peso depreciation was less than five percent and would still have a minimal effect in the production costs of most consumer goods.
In a phone interview Tuesday, Lopez admitted that to a certain extent, a weak peso might put a possible cost pressure on goods with import component. However, this would depend on the percentage of imports out of the total cost of production. In most consumer goods, the imports, usually in the form of raw materials, do not account for a bulk of the production cost. “It’s still a gradual depreciation and would not have a significant impact on prices unless currency depreciation doubles. Commodity prices are at low levels and that could cushion any impact. It is safe to say that from where we are now, we don’t see any big effect on prices. It may even promote exports and consumption due to (increased value of) dollar remittances from OFWs,” he said.
“The only good thing about this slight depreciation was that it would mean higher peso per dollar conversion for the OFW remittances, BPO revenues. It means more peso in the wallets of Filipinos and this could help in boosting consumption spending. For our exporters, a slight depreciation mean that our exports will become more competitive in terms of dollar pricing because they get more for every dollar. This could help encourage and grow our exports,” Lopez added.
Meanwhile, Fernando Martinez, founding chair of the Independent Philippine Petroleum Companies Association (IPPCA), said in a text message that a depreciation of the peso against the dollar would often hike the prices of imported fuel products.
Martinez, however, pointed out that the softening of oil prices in the global market might offset the peso depreciation, noting that the movement of international oil prices per dollar would have a more significant impact than foreign exchange movements.
A dollar increase or rollback per barrel can move local pump prices by 35 centavos a liter, while the impact of forex movements would only be around 8 centavos a liter, he explained.
“(The impact of peso depreciation for now) is very slight. A fuel price rollback would still be possible if the corresponding international price per barrel of oil also deteriorates,” Martinez added.
On Monday, the peso closed at 48.25 to a dollar, a seven-year low since the close of 48.335 on Sept. 15, 2009. This was reportedly due to investor concerns on the Duterte administration’s war on drugs coupled with external developments causing uncertainty globally. At the Philippine Dealing System, the domestic currency reached an intraday low of 48.26 after opening at 48.07 on Monday, weaker than Friday’s close of 47.99 to a dollar. SFM