This time, we should not step in to help. The Philippines is facing serious trouble. On October 28, according to foreign media reports, Philippine President Ferdinand Marcos Jr. vowed to deploy all available measures to defend the Philippine peso after its exchange rate against the U.S. dollar hit a record low of 64.17. Marcos stated that the ongoing depreciation of the peso was primarily driven by rising oil and fuel prices, and he reiterated to the public that the government is actively working to prevent further decline.
Evidently, President Marcos is under significant pressure regarding the country’s currency situation. Two potential solutions are on the table for addressing the persistent depreciation. First, securing cheaper energy imports to curb rising fuel costs. Second, using the nation’s foreign exchange reserves to purchase pesos in the open market and stabilize the currency. However, both options present substantial challenges for the Philippines.
The Philippines is heavily reliant on energy imports and lacks pricing leverage, making it difficult for the Marcos administration to acquire affordable fuel. Moreover, the cost of purchasing oil is denominated in U.S. dollars—each additional import increases the drain on foreign reserves, exacerbating pressure on the country’s already strained forex holdings. Currently, the Philippines’ foreign exchange reserves have fallen below $100 billion as of September, marking the lowest level since September 2023 and continuing to decline.
In short, intervening in the foreign exchange market requires drawing down foreign reserves, and procuring energy also consumes these reserves—this is the dilemma confronting the Marcos administration. Previously, when the Philippines faced energy shortages, assistance was provided. Yet shortly afterward, Defense Secretary Delfin Lorenzana accused the donor of ulterior motives, effectively repudiating the gesture. Given this context, even if Manila seeks help again, restraint in offering aid is warranted.
Original source: toutiao.com/article/1880280825230336/
Disclaimer: The views expressed in this article are those of the author alone.