The Manila Times
THE government should remain agile and proactive as the Philippine peso continues to depreciate amid market turbulence fueled by the prolonged war in the Middle East, an analyst said Friday. Froilan Calilung, who teaches political science at the University of Santo Tomas, said that while the depreciation was driven largely caused by external factors, specifically, higher oil prices and a strong US dollar due to the Middle East crisis, it threatened to drive up inflation through higher import costs. “The movement of the peso isn’t just a number on a screen; it’s something felt by every Filipino family at the grocery store and the gas pump,” Calilung told The Manila Times. “The goal is not to fight the market, but to navigate it. We need to be agile. While we wait for the situation in the Middle East to de-escalate, our focus should be on ensuring that there is enough food and cheap electricity for every Filipino,” he added. Calilung said that the Philippine peso was currently facing a “perfect storm” of external pressures. “While our domestic economy remains resilient, we are being hit by a strong US dollar driven by high interest rates in the States and geopolitical uncertainty,” Calilung said. “We are seeing a ‘risk-off’ sentiment. When there is global instability, investors flock to the safe-haven dollar,” he added. The analyst also said the Philippines was heavily dependent on imported crude oil, leaving the country vulnerable to global price shocks, causing high inflation. “We are not the only ones experiencing this, but because we are import-dependent on crude oil and some basic foods, we really feel the impact of a depreciated peso. When the peso weakens, the price of our imported oil automatically increases,” he said. Calilung said the war in the Middle East complicated the government’s “cushioning” efforts because “it hits us on two fronts: energy and remittances.” “If the crisis escalates, global oil prices spike. Since we buy oil in dollars, a weak peso means we are paying a ‘double premium’ — higher oil prices multiplied by a more expensive dollar,” Calilung said. “While a higher exchange rate means more pesos for OFW (overseas Filipino workers) families, their purchasing power also decreases due to the high prices here. It’s a zero-sum game,” he added. The analyst then recommended some policy measures, including active intervention from the Bangko Sentral ng Pilipinas (BSP). “We cannot simply ‘fix’ the exchange rate, but we can manage the volatility,” he said. “The BSP should remain active in the foreign exchange market to prevent ‘sharp’ or speculative swings. We don’t want a free fall; we want stability,” Calilung said. “The BSP needs to be careful in adjusting interest rates. If we keep rates too low, the peso weakens further. If too high, it might hurt our local businesses and MSMEs,” he added. Calilung also said the government should reduce imports and implement targeted subsidies for vulnerable groups. “We must strengthen local agriculture and stimulate renewable energy projects so that we are not too ‘vulnerable’ to regional conflicts,” Calilung said. “Instead of broad programs, focus the budget on the most vulnerable sectors — our farmers, fisherfolk, and PUV drivers — to ensure they can survive the transition,” he added. Malacañang earlier said the ongoing war in the Middle East has contributed to the Philippine peso’s decline to a record low. “This is really one of its effects, and the weakening of the peso against the dollar is also due to the geopolitical tensions happening in the Middle East,” Castro said in a Palace briefing on Tuesday. The Palace official also said that the new development was concerning, but offered the assurance that the president and this administration were keen on doing everything possible to manage the situation. Automatic relief Bagong Henerasyon Party-list Rep. Robert Nazal is pushing for an automatic relief system similar to the Covid pandemic-era Bayanihan laws that would be activated upon the declaration of a national energy emergency to protect Filipino families, workers and key sectors. Under his House Bill 8821 or the “National Energy Emergency Relief and Protection Act,” a standing legal framework would be created for ready-to-roll assistance, eliminating the need to craft emergency measures from scratch during every crisis. Nazal noted that the country is already feeling the impact of volatile fuel prices due to the war in the Middle East, underscoring the need for automatic relief once a national energy emergency is declared. “The Philippines is confronting an energy shock with immediate consequences for transport costs, food distribution, business operations, and household welfare,” Nazal said in his explanatory note. The bill complements existing executive actions by providing a permanent statutory backbone for crisis response. “This bill does not duplicate that executive action. It provides what only legislation can firmly establish: a standing statutory framework for automatic relief, market stabilization, logistics continuity, labor protection, and targeted public support during any declared national energy emergency,” he added. He stressed that fuel shocks do not stop at the pump but also spill into fares, food, electricity, logistics, and the cost of keeping businesses open. Nazal’s measure provides a comprehensive package of financial assistance, livelihood support, and cost-of-living protections for vulnerable households and workers. It also proposes a P100-billion Energy Emergency Relief Fund and creates a multi-agency council to oversee implementation and ensure accountability. Qualified low-income families under the bill will also receive emergency cash aid equivalent to at least two weeks of the regional minimum wage, along with targeted cash transfers and food support. Displaced workers will be entitled to assistance equivalent to at least one month of the regional minimum wage, plus access to emergency employment, retraining and livelihood programs. CATHERINE VALENTE, RED MENDOZA, AND FRANCO JOSE BAROÑA
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