'Policy should remain calibrated,' says economist amid weak peso

MANILA, Philippines- The government should focus on long-term solutions, such as diversifying energy sources and attracting more foreign investment, as the Philippine peso’s recent slide drives up fuel and food costs for consumers, an economist said on Saturday. Union Bank of the Philippines chief economist Ruben Carlo Asuncion told The Manila Times that the peso’s recent depreciation has been largely driven by “external shocks,” particularly higher oil prices and a stronger US dollar amid the war in the Middle East, rather than by domestic weakness. He noted that a weaker peso “makes it more costly for the government to cushion fuel and food prices, as it amplifies imported inflation, even as remittances and exports provide some offset.” “Policy should remain calibrated—allowing the exchange rate to act as a shock absorber while the BSP smooths excessive volatility and fiscal support is kept targeted and temporary,” Asuncion said. “Over the medium term, energy diversification and stronger external inflows matter more than defending any specific peso level,” he added.

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