Amadeusz Juskowiak

Philippine planning chief urges peso devaluation

The Philippines must devalue the peso if it wants its exports to remain competitive Economic Planning Secretary Solita Monsod told Reuters

The pesodollar rate has to be undercut to make our exports more competitive Monsod said an interview No question about it Im saying you cannot argue with success Taiwan South Korea West Germany Japan all those miracle economies deliberately undervalued their currencies

The peso has been freefloating since June 1984 It is currently at about 2050 to the US Dollar

Finance Secretary Jaime Ongpin has said the government does not intend to devalue the peso and wants it to be flexible and able to continue to respond to market conditions

Monsod said Ongpin was looking at the exchange rate from the point of view of finance If the dollar rate goes higher our debt service in terms of pesos gets higher so the financing is very difficult she said But I am looking at it in terms of the economy

She said she was not trying to oppose official policy

Im just saying keep it competitive I do not want it to become uncompetitive because then we are dead

Monsod said The ideal movement in the pesodollar rate is a movement that will reflect differences in inflation rates of the Philippines versus the other country Its an arithmetic thing

Official figures show Philippine inflation averaged 08 pct in calendar 1986 Ongpin told reporters on Saturday it was expected to touch five pct this year

He said the government and the International Monetary Fund had set the pesodollar 1987 target rate at 2080

The peso lost 222 pct in value to slump to 18002 to the dollar when it was floated in 1984