The Market Monitor Minding the Nation's Business
Economic managers have revised the government’s foreign exchange target for 2017-18 in response to the prevailing weakness of the peso as a result of overseas developments.
Budget Secretary Benjamin Diokno, after a meeting of the inter-agency Development Budget Coordination Committee (DBCC), said the committee has revised the 2017-18 foreign exchange assumption to 48-50 from 45-48 in the earlier projection for 2016-18.
“We are comfortable for P50 to a dollar as upper bound assumption for the exchange rate because we have a steady inflow of dollars. In the past, we have a crisis in our dollar reserves but that is no longer the case,” Diokno said.
Last Dec. 20, the local unit finished trade at 49.99 per dollar but touched the 50 to $1 mid-trade due to impact of external developments. It started the year at 47 to a dollar.
The DBCC, however, maintained the target for domestic output and the inflation rate.
The gross domestic product (GDP) target for 2016 is a range of six to seven percent, while the 2017-22 range is between seven and eight percent.
In the first three quarters, the domestic economy expanded by seven percent, with the third quarter print alone at 7.1 percent, the highest in the region.
Inflation target for 2016 to 2018 is between two and four percent. As of last November, inflation remained below target after it averaged at 1.7 percent.
However, inflation has posted upticks and have risen to within-target levels since last September when it rose to 2.3 percent from month-ago’s 1.8 percent. It remained at the said level last October and jumped to 2.5 percent last November.
Inflation fell to below-target levels in May 2015 due to drop in oil prices. It only went up to within the target range last September, in line with monetary officials’ projection, because of hikes of oil prices in the international market and the impact of weather disturbances on food supplies, among others. RIZA LOZADA