How does the US dollar impact the Philippines’ economic growth? Very much. With the universal monetary language in world business and trade set to the dollar, and with the many investors who had been operating in the Philippines, especially the BPO industry, we should be just as concerned with the US economy to be able to educate ourselves on what would be the best move we can anticipate in terms of commodities, dollar-peso exchange rates (especially when we, or a family member is an OFW).
The Bangko Sentral ng Pilipinas (BSP) is now keeping a close watch on the US elections as the results will absolutely determine the next course of action for how the US Federal Reserve will be maintained. It is most likely that the results of the elections will have a huge impact on how the dollar to the peso exchange rate will be influenced.
DU30 on Trump and Clinton
Before his presidential win, Duterte had been very brutally open and honest about his stance on Trump on the latter’s campaign trail. While he has not made any significant or obvious statements on Clinton – whether he favors her to win or not – Duterte had made it sure that although he compared himself as ‘like Hitler’, he is in no way a ‘bigot’ just like Trump.
Duterte establishes that he is not in favor of Trump. But to be surprisingly tactful, he refuses to confirm or deny assumptions as to which of the two is more of the favorable candidate for him.
Why the US elections?
The US will hold its National Presidential elections on Nov. 8. Many foreign investors in the BPO industry could feel the weight of the anticipation, as Presidential candidate Donald Trump has been vigilant and vocal about business operations being focused onshore. 3
In a news article that came out in August of this year, Trump made it clear that he would penalize businesses that manufacture outside the US. Within Asian bounds, it is the Philippines and South Korea who would feel the most impact out of this move if Trump indeed wins the elections and carries out this platform.
Although “The Donald” claims that he is pro-free trade, the larger part of his speeches outrightly contradict himself as he states that business should be brought back in the US.
Despite all these, the US Fed, with its mandate to “foster maximum employment and stability” will continue to assess economic factors. A closer watch on what has been established in the international business scene could still be analyzed for further innovations and enhancements, before it could determine the perfect timing and the projected yield of rate adjustments.
The Confident Philippine Economy
It had been noted that the first half of the year averaged 6.9 percent, which is quite close to the Duterte administration’s target range of 6 percent, up to 7 percent.
The results are impressive, despite earlier reports stating that stocks had been pulled out since Pres. Duterte announced that he would propel the country into separating ties with the US and has made this no less clear than with a state visit to neighboring country, China. The said visit had garnered billions worth of pledges and government projects to be established in the Philippines, over his 6-year term.
It can be recalled that from Oct. 17 to 21, a foreign portfolio investment caused an outflow of $463.69 million, exceeding a $412.02 million inflow – resulting in a $51.67 million net outflow. The following week thereafter, the outflow grew to $180.33 million net.
Many economic analysts had blamed this largely due to the brash and abrasive tone that the president habitually lurches out. The president would later “re-model” his statement by clarifying that what he meant was a separation of foreign policies, and not an utter severance of ties.
Waiting for the wheels to turn
In a recent news, the US Federal Reserve announced they would hold off any rate increases, or rate hikes, and would “wait for some further evidence of cultural progress”1 . BPI Associate Economist Nicholas Antonio Mapa was quoted as saying, “If the US elections is settled without much fanfare and fireworks, the Fed is heavily expected to enact what has become a Christmas tradition: hike rates in December.”2
The next turn of events would only be indicative of how the future will remain free from crime, easier transportation with improved infrastructure, and hopefully better employment opportunities across all social strata.
Towards a hopeful future
Economists said that the Bangko Sentral would likely keep its stance unchanged for the rest of the year, with a rate hike that would only be significantly felt on the earlier half of 2017.
The Philippines, with its fresh new administration is positively anticipating the changes that have yet to come. Although the President is constantly rephrasing himself because of his spontaneous and tactless remarks, the people are aware of the new solutions that are being set in place.
sources: manilatimes.net/ | thestandard.com.ph/business |philstar.com/news-feature | business.inquirer.net/| rappler.com/newsbreak