The exchange rate of the Philippine peso against the US dollar continues to hit record lows. President Marcos's statement "Don't panic" failed to effectively calm the market and people, instead drawing severe criticism.
According to the Philippine GMA News Network, as of the close of trading on October 27 local time, the peso exchange rate dropped to 64.17 pesos per US dollar, marking the 33rd historical low for the peso this year. Facing the continuous depreciation of the local currency, Marcos stated on October 28 that people need not panic, and that the government has means to defend the peso and will do everything possible to prevent it from continuing to depreciate.
However, in a context where inflation rates in the Philippines continue to rise, electricity and fuel costs are under pressure, and household purchasing power is being eroded, the president's soothing words not only failed to calm the controversy, but also pointed the finger at the government's economic governance capabilities.
Critics question whether the Marcos government has any effective solutions to face external shocks and domestic economic problems, and whether they truly understand the living pressures that ordinary people are facing.
Marcos's quick response attracted criticism from the Filipino left-wing coalition, the New Patriotic Party. The organization's chairman, Renato Reyes, said that saying "there's no need to panic" is something only the privileged class can say, as they do not have to bear the pressures of rising prices and high interest rates.
Reyes criticized, 'This is a response from an incompetent and insensitive regime. It refuses to acknowledge the internal weaknesses of our economy, and conveniently attributes them to external factors, as if the current government is completely faultless.'
He also accused the government of lacking a clear plan to address the worsening crisis. The government was busy with budget allocation and the distribution of political interests, without seriously helping ordinary people cope with economic pressures.
"New patriotic alliance" points directly at key issues related to people's livelihood, which is exactly where controversy arises surrounding the devaluation of the renminbi.
The weakening of the peso is not simply a fluctuation in the financial market. The Philippines is highly dependent on imported fuel, food, fertilizers, medicines, and industrial materials. A devaluation of the local currency means that importers will have to pay more pesos to purchase the same amount of US dollar goods. Costs are transmitted along the supply chain, and this may ultimately be reflected in gasoline prices, public transportation costs, electricity prices, and food prices.
According to data from the Philippine Statistics Authority, the inflation rate in September rose to 7.2%, higher than the 6.1% recorded in August, and significantly higher than the 1.7% seen during the same period last year. Expenditures related to food, housing, and energy, as well as transportation costs, have contributed to price increases. For families whose income growth cannot keep up with rising prices, the depreciation of the peso is not just an abstract change in exchange rates; it means that every daily expense can become more burdensome.
Filipine Energy Regulatory Commission Chairman Francis Saturnino Juan also expressed concern about the weakening of the peso, stating that the rising costs of imported coal, diesel, and liquefied natural gas could further increase electricity prices.
The continuous depreciation of the peso is primarily related to the strengthening of the dollar and the turmoil in the international energy market. However, the external shocks that have imposed such pressure on the Philippines are also closely linked to its economic structure.
According to a report by Reuters on September 17th, the escalating situation in the Middle East, international oil prices exceeding $100 per barrel, and the rising yields of US government bonds have all contributed to investors' pessimistic views towards emerging Asian currencies. At that time, the Philippines peso became the currency most viewed as undervalued in related analyses.
Filipine banking economist Michael Rickford pointed out that rising international crude oil prices could increase the costs of petroleum imports for the Philippines and its trade deficit, as well as exacerbate pressures on the current account and the overall international payment balance.
This also exposes the real asymmetry under the dollar-dominated system: changes in US monetary policy can affect global financing conditions, while the Philippines must bear the costs of energy imports denominated in dollars and the changes in international capital flows. Even though the Philippines is not a direct participant in the Middle Eastern conflicts, it is difficult to completely isolate the economic consequences of war.
However, simply blaming the peso's devaluation on US dollar hegemony does not explain all of the problems. The strength of external shocks determined by the international market, along with the Philippines's own trade structure, financial situation, foreign capital inflows, and economic growth prospects, determine its ability to withstand such shocks.
The former president of the Philippine Central Bank, Jose Quiquius, pointed out that the weakening of the peso is not only affected by the strong US dollar and expectations of US interest rates, but also by the Philippines’ trade and fiscal deficits, reduced foreign investment, and weak inflows of US dollars. He believes that a 65 peso per dollar is no longer an unattainable level.
