In the Aquino era, the focus was on financial flows, which rested on a strong peso. In the Duterte era, it is on the huge investment drive, which can live with a weaker currency. The peso’s political economy is shifting.
Recently, international media have released contradictory peso reports. But the phenomenon is not new. For instance, Bloomberg’s Ditas Lopez first attributed the peso’s decline to Duterte two months before the actual election (April 27, 2016). Yet, after the election, the peso rose for weeks beating forecasts so that by late August 2016 even Bloomberg had to admit that he currency had completed the “best performance in Asia this month.”
That performance was mainly the net effect of a Duterte reassessment by the markets. Most media had vilified him as a threat (social media was a different story). But as Duterte launched his infrastructure agenda, observers realized that the country was not facing a “populist threat,” but a huge investment drive.
Yet, historically, infrastructure drives favor weaker currencies; a fact that got lost in the translation. Instead, much of the media, including Lopez, continued to lament that “Duterte’s peso rout runs counter to the booming Philippine economy” (September 29, 2016). The assumption was that a thriving economy must go hand in hand with a strong peso and that if this is not the case, then the economy cannot really be booming.
About the Author
Dr. Dan Steinbock is the founder of Difference Group and has served at the India, China and America Institute (US), Shanghai Institute for International Studies (China) and the EU Center (Singapore). For more, see http://www.differencegroup.net/
The original commentary was released by The Manila Times on March 11, 2019