By Aurea Calica, Marvin Sy
Economic managers are on the lookout as Philippine stocks and the peso weaken due to recent global market developments.
However, Malacañang said yesterday there is no cause to worry about the country’s economic stability.
Deputy presidential spokesperson Abigail Valte said over radio dzRB the Bangko Sentral ng Pilipinas is on hand to track and monitor the movements in stock markets and currencies.
Valte said although most regional stock markets had experienced a fall as they were reacting to speculations that some central banks would raise interest rates, “ours are stable.”
The situation “is causing some fund managers to either liquidate or take their money out of the market,” she said.
“The fundamentals of our economy are strong and it seems it will not be adversely affected,” she added.
The peso touched its lowest level in more than two years on Friday before bouncing back to close at P43.72 from a 17-month low of
P43.80 last Thursday. Dollars traded reached $1.084 billion, down from $1.407 billion the previous day.
Analysts said investors would be able to figure out which countries were economically sound in terms of fundamentals and would eventually stop reacting “emotionally” to developments.
Financial markets around the globe have been rattled since Thursday by pronouncements from US Federal Reserve chairman Ben Bernanke that stimulus measures would be scaled down later this year.
On inflation, monetary officials said consumer prices would remain stable despite the peso’s weakness.
A weak peso makes imports more expensive, thus may prompt importers to raise local prices to recoup their costs.
Foreign selling also further depressed share prices, with the local market mirroring a sharp decline in Wall Street that is also reeling from the potential pullout of the US Federal Reserve’s stimulus measures.
Tapering off the stimulus program is seen to jack up interest rates, encouraging foreign funds to book profits in emerging markets and return to advanced economies.
Earlier, Presidential Communications Development and Strategic Planning Office Secretary Ricky Carandang said investors were balancing their portfolios and keeping their profits.
“For example, 50 percent for stocks, 50 percent for bonds. If your stocks go up, and your bonds go down, your 50-50 starts becoming 60-40, and you have to start unloading to rebalance your portfolio,” Carandang said.
‘Sin taxes failed’
Meanwhile, Sen. Ferdinand Marcos Jr. said amendments to excise tax on tobacco and spirits or sin taxes have failed to bring about desired results for the government.
Marcos, who questioned the revenue projections of the Department of Finance (DOF) on revised sin taxes, particularly on tobacco, during hearings in the Senate, said the government failed to meet its target collections in the first quarter.
As a former governor and congressman of Ilocos Norte, where a significant amount of Virginia tobacco is produced, Marcos said smuggling of tobacco products has increased since the law was implemented.
“The sin taxes have not collected a single centavo because smuggling has flourished,” Marcos said. “And that is why the collections, both as a quantitative solution and as a qualitative argument, clearly are flawed.”
During the debates on the sin tax, Marcos argued that the DOF calculations were incorrect and the impact of the law would be “ruinous to the industry.”
He said he would stand up in plenary one year after the implementation of the law to let people know whether it has been effective or not.