THE premise sounded absurd, which is why we all had a field day making memes on social media out of a Sandro Marcos quote that says, “The peso is not weak because the peso is weak. The peso is weak because the dollar is strong.”
Even when the argument was extended to provide the Marcos preposition its intended object, the latter does nothing to avert our attention from the fact that the purchasing power of our local currency, the peso, is greatly diminished even if we indulge Sandro and stipulate that the peso is not weak in and of itself.
Amidst this confounding word soup that we had to bear with, we common folks only seek answers on why the peso-dollar exchange rate has spiked to such levels, and why despite the assurance that the peso is “not weak,” we still feel the pinch. Compared to the start of the year, how much do we pay now for jeepney fare or bus fare? Fuel? Groceries? Other staples?
For sure, as I have felt personally, our budget for these commodities obtains less goods compared to last year’s volume. In the Marcos echo chamber, punctuated no less by this Sandro Marcos re-direct where he also found an ally in the words of former Senator Manny Villar, the reason for this inflation, or why our money could not buy that much, and why we are experiencing a decline in economic growth is because of the impact of the war in Ukraine arising from Russia’s invasion on February 24, 2022.
The economic sanctions that the western economies led by the United States and its allies had imposed on Russia resulted in a rippling global economic fallout. The effect is felt across the globe not only because the war disrupted the forward momentum of many of the world’s economies but also derailed the process of post-pandemic recovery, primarily the normalization of production of goods and services.
This double whammy indeed has been the standard narrative of government when pressed for an explanation on why we are going through such an economic crunch. At one point they might say the Philippines inflation rate might be at 6.7 percent, but the world average is at 10 percent. Similarly, Sandro Marcos defends this storyline to say that the peso-dollar exchange rate might depict a weakened local currency, but it remains “stable” against the yuan, yen, and the British pound.
Still, if we ask why there is a disparity in the exchange rate, Sandro goes on to say that when confronted with a crisis on a global scale, “investors, consumers and shareholders” will “get” (invest? trade in?) the “safest” currency that is the dollar.
Respectfully let me tell you, Congressman Marcos, we are not the kind of “consumer” with a dollar account that you refer to. I suppose your words imply that we who draw our wages in pesos, unsafe as it were, would have to contend with its shrinking value and hope that with hyper-inflation, it will not end up like the Mickey Mouse money of old where a bagful of currency could not even buy a piece of banana.
But the Congressman might have a contrary argument. Still following his statement, the peso, he counters, is performing well “domestically.” He goes on to say that the problem with our currency is its dismal international shooting clip. Again, this argument confounds me to no end. For how can the Congressman from Ilocos Norte even speak of the peso’s overall competitive performance when all the essential goods that we purchase using the local currency are all brought in “domestically” through the process of importation.
What goods are these? Anywhere from garlic, onions, sugar, flour, rice, and fuel. Name it. Importation of these goods entails trading using what the Congressman calls the safest currency, the dollar. Thus, if these goods are obtained using dollars at their current bloated rate, the retail cost of these products is passed on to us ordinary consumers at the prevailing peso-dollar equivalent. The result is what you get at the gas pumps which is no more than the snot blown out of your nose. Or, from your panadero, a piece of pandesal no bigger than the size of your thumb.
These are issues that the government needs to address or that the president, by reason of the majesty of his office, needs to confront in order to assure us constituents that he is in control. But it is just our misfortune ( and that includes those who voted for him) that he has an aversion towards interviews by the working independent media since the start of his campaign. That leaves us with the other misfortune of bearing with the outputs of the president’s friends such as Toni Gonzaga or Anthony Taberna.
Still we are left with no answers or non-answers such as that of Sandro Marcos, or a “because-I-said-so” answer courtesy of newly minted Executive Secretary Lucas Bersamin. Obviously, President Marcos could not be bothered to respond because he is either busy partying or is out of the country watching an F1 race.
We who are in distress with what is taking place on the economic front are forced to make sense of the situation while not being an economist and all. But former Senator Villar, an entrepreneur, would regale us with technical jargon such as balance of payments, and interest rates only to conclude with “it’s a case of a strong dollar and not a weak peso.” Meaningless, but with the intention to assuage our worries.
This “interest rates” is interesting because it is a tool deployed by the US Federal Reserve to curb the effects of inflation. It is meant to dampen the demand for currency and regulate spending in order to control the escalation of the prices of commodities. But while it protects the ordinary American consumer from feeling the pinch of inflation, it has the opposite result in dollar-dependent economies like the Philippines.
Today, however, the American economy is no longer impervious to challenges, and the latest of these is the decision by Saudi-led OPEC+ to cut back on oil production to two million barrels a day. This frustrated US President Joe Biden so much because the supposed gains of a reduced demand on fuel which is to bring its cost down has been undermined by the supply cutbacks. This is aggravated no less by the news that the decision was driven by talks between Saudi Arabia and Russia that a cutback will shore up demand for Russia’s oil, the latter being a major global player in oil and gas production.
And this takes us back to the Philippines where it has been reported that the government is considering buying Russian oil in order to obtain a cheaper alternative to oil being bought from OPEC. Considering that the Russian economy is heavily sanctioned, using precious Philippine dollar reserves in exchange for rubles to shore up the Russian economy seems like a bad idea considering it will bleed the Philippines from these precious reserves and the economic sanctions on Russia being US-led, it will surely affect US-Philippine relations.
Finally, the reports, too, that the Philippines will revive oil exploration off Palawan sounds like a promise made for the gullible. First of all, an earnest effort to establish an independent oil reserve for the Philippines could take a generation to put into place. What is definite is that we are feeling the pinch of this economic downturn. Not to hear anything from the highest levels of Philippine leadership feels a lot like betrayal.