US Dollar Against Peso Widens But Fil-Ams Favor Rodrigo Duterte
When it comes to running the Philippine economy, foreign investors have expressed confidence with other top presidential candidates than front-runner Rodrigo Duterte. Simply put, they believe the provincial mayor does not have what it takes to do business in a global stage. Ironically though, Filipino-Americans showed a strong preference for the controversial candidate who is liken to Donald Trump and Vladimir Putin.Advertisement
Duterte has been leading in a lot of polls recently as the Philippines gets closer to its presidential election. Following the Philippine presidential debate in Cebu, Asian Journal reported that the controversial Davao mayor has also been enjoying increased support from the Filipino-American community.
In fact, the online polling done by The Filipino Channel’s “Balitang America” after the debate revealed that 60 percent of the online responders favored Duterte. The question posed to them was, “If the Philippine Presidential Election was held today, who would you vote for?”
According to a recent survey by the Social Weather Stations, Duterte leads the race with 33 percent of the national scores.
However, this does not sit well with foreign investors as well as local economists.
The peso dropped 0.1 percent to 46.81 per dollar and the Philippines’ benchmark stock has also dropped 0.9 percent on Wednesday, April 27, according to a report from Bloomberg. ING Groep NV said the exchange rate, US dollar to peso, is predicted to get as low as 47.60 by the end of 2016.
Bloomberg also said in its report that the nation’s bond has soared to an eight-month low and foreign investors have pulled out as much as $41 million from local stocks. Market analysts also saw that peso devaluation has reached its lowest level on Tuesday, April 26.
The report noted that the devaluation happened as election polls are consistently showing strong win for Duterte.
“He’s a bit of a one-trick pony with his law and order message. I don’t think he’d do anything to upset the apple cart with economic policy, but I don’t see economic reform as being his priority. The comparisons to Trump are obviously rather unflattering whether justified or not!” Edwin Gutierrez from Aberdeen Asset Management Plc in London was quoted as saying by Bloomberg.
“His comments were a curve ball to the market. It more or less shakes the confidence of investors that gains in reforms are irreversible. We estimate something like 70 to 80 percent of the peso’s weakness is attributable to the local developments,” Joey Cuyegkeng, economist at ING Groep NV in Manila, told Bloomberg.
A number of economists have also pointed out that former Interior Secretary Mar Roxas and Senator Grace Poe are the two best candidates that can continue the path to progress that the country’s economy has been on. Since Philippine President Noynoy Aquino took office in 2010, the country has reportedly become the fastest growing economy in the world with its stock market also doubling in size.
A separate confidence survey recently done by Bloomberg showed that of the five main presidential candidates, Roxas secured the highest confidence support while Poe trailed closely. For them, the key to bestowing much confidence in the candidates lies in their ability to continue with the economic reforms that the current administration has already put in place.
This is exactly the sentiment echoed by Jonathan Ravelas, the chief strategist of BDO Unibank Inc. in the Philippines. “Poe and Roxas are perceived as the most similar to the present administration. It might not be what the popular vote wants,” he explained. Meanwhile, a BMI note to one of its clients also pointed out that Duterte “is somewhat of an outlier with a limited economic track record.”