The Philippine peso remains “very strong” in real terms despite its decline to a seven-year low against the US dollar, an official of the Finance Department said Wednesday.
Finance Undersecretary and chief economist Karl Kendrick Chua said the movement of the local currency would actually help improve the competitiveness of exports and the value of dollar remittances.
The peso closed at a seven-year low of 48.25 against the US dollar Wednesday, down from 48.17 against the greenback Tuesday.
“While the peso has moderately depreciated in nominal terms in recent weeks, the peso in real terms is still very strong, which deters competitiveness,” Chua said.
“This means that the depreciation in recent weeks is welcomed as it will help improve export competitiveness and value of remittances, which benefits around 40 percent of the economy,” he said.
Chua said the peso was also expected to remain “broadly stable” over the medium term, supported by solid macroeconomic fundamentals and steady stream of remittances from overseas Filipino workers and dollar receipts from the business process outsourcing sector.
The Contact Center Association of the Philippines welcomed the depreciation of the peso against the greenback, saying it would make the country a more attractive investment site for call centers and BPO companies.
CCAP president Benedict Hernandez said the Philippines was expected to sustain its current status as the top location for contact center services.
“Peso devaluation will not have that much impact on our revenues and operation since the industry is typically dollar-denominated, but it will certainly fortify our prominence as the premier destination for contact center services,” Hernandez said in a news briefing during the International Contact Center Conference and Expo.
Hernandez said the industry was now enjoying the benefits of low foreign exchange rate, offsetting slow gains during times when the dollar was not as stable.
The group said the weaker peso was good for the industry.