DOF: Weakest currencies come from Asia’s fastest growing economies

In its economic bulletin released on Friday, DOF data showed that those countries with weakest currency performance this year were from economies that registered the highest gross domestic product (GDP) growth in the first quarter of the year. (Pixabay photo)

MANILA — The Department of Finance (DOF) sought to allay domestic and foreign investors’ fears that the depreciating peso is dragging the national economy down with it.

In its economic bulletin released on Friday, DOF data showed that those countries with weakest currency performance this year were from economies that registered the highest gross domestic product (GDP) growth in the first quarter of the year.

Among the worst performing currencies in Asia since January this year include Indian rupee, which depreciated by 7.46 percent; Philippine peso, by 7.42 percent; Korean won, by 6.13 percent; and Indonesian rupiah, by 4.97 percent.

But looking at the GDP growth of these countries during the first quarter of 2018, India’s economy rose 7.7 percent, Philippines by 6.8 percent, and Indonesia by 5.1 percent. Aside from Asia, these countries recorded the fastest GDP growth rates in the world.

“Exchange rate movements—whether depreciation or appreciation—should not be taken as a sign of structural weakness in the economy,” the DOF economic bulletin noted.

“The exchange rate should move flexibly so that economic players are able to adjust promptly to market dynamics, thus sustaining economic growth,” the DOF added, noting that foreign exchange rates are moving according to global risks and uncertainties.

The DOF cited downside risks to Philippine peso, which include ongoing turbulence in financial markets due to trade war, rising interest rates of the United States Federal Reserve System, and European Central Bank’s monetary stance as it is about to cap its quantitative easing.

“The Philippine peso is moving in tandem with global currencies,” the DOF stressed.