Economy House Calls for Inquiry into Strong Peso's Economic Repercussions

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In a significant move reflecting growing concerns over the Philippine economy, Cagayan de Oro City 2nd district Representative, Rufus Rodriguez, has tabled House Resolution No. 2318. The resolution calls for an official inquiry into the effects of the Philippine peso’s strength on various economic sectors, spotlighting concerns over declining export competitiveness and the financial strain on overseas Filipino workers (OFWs).

 

The value of the peso currently hovers around P55.66 to the US dollar, a notable decrease from the P57-P58 range seen earlier. Rodriguez's initiative focuses on the necessity of evaluating the Banko Sentral ng Pilipinas's (BSP) monetary and exchange rate policies. The objective is to determine the broader impact of a strengthened peso on the economy and to consider potential corrective measures.

 

Economists have voiced concerns that the peso’s appreciation could have pronounced adverse effects. A fortified currency, they argue, tends to make Philippine exports more expensive on the global market, reducing their competitiveness. Local industries, particularly those in agriculture and manufacturing, might find themselves at a disadvantage, as cheaper imports and pricey exports can skew trade balances and contribute to economic instability.

 

Moreover, the resolution underscores the difficulties faced by millions of Filipino families who depend on remittances from relatives working abroad. The strong peso diminishes the value of these remittances when converted back into the local currency, thereby eroding purchasing power. This change can affect domestic consumption, a vital engine of the Philippine economy, potentially slowing down economic growth.

 

The inquiry also seeks to explore the impact on the business process outsourcing (BPO) sector, one of the country’s key employment and foreign exchange revenue sources. In recent years, the sector has thrived due to competitive pricing. However, a stronger peso inflates operating costs and undermines the competitiveness of Philippine-based services in the global marketplace, threatening jobs and income generation.

 

Rodriguez advocates examining the feasibility of deploying strategic capital controls, as permitted under Section 72 of Republic Act No. 7635, known as the New Central Bank Act. Such measures could serve to cushion the economy against the disadvantages posed by the strong peso, helping to fortify economic resilience.

 

Calling for a coordinated response, Rodriguez suggests the formation of a multi-committee inquiry involving the Committee on Banks and Financial Intermediaries, Committee on Economic Affairs, Committee on Overseas Workers Affairs, Committee on Trade and Industry, and Committee on Information and Communications Technology. The aim is to develop comprehensive, informed policy recommendations.

 

These committees are tasked with crafting strategies that will not only stabilize the economy but also shield vulnerable sectors from potential fallout. Through this extensive examination, it is expected that the House can generate policies that contribute to sustained and inclusive economic growth.

 

The resolution and the proposed inquiry represent a crucial step in addressing the current challenges posed by currency fluctuations. By proactively examining and responding to these economic pressures, the House aims to reinforce the Philippines’ economic framework, ensuring robust growth and stability for all its citizens amidst a changing economic landscape.

 

  Adapted by ASEAN Now from Manila Bulletin 2025-06-06