THE stock market has crashed, and the peso-dollar exchange rate has dropped.
This is the latest update before the end of this week.
This week, it reached P59 per dollar.
This is the lowest value of the peso during the Marcos Jr. administration.
Moreover, the stock market fell by 89.93 points or 1.38%.
This is also one of the steepest declines in the history of the Philippine Stock Market.
This is concerning as it can greatly influence investor withdrawal from the country.
According to economist Dr. Michael Batu, the political climate in the Philippines has a lot to do with this.
Including the tensions over the disputed territories in the West Philippine Sea.
“I think the political situation in the Philippines, along with the geopolitical risk due to our relationship with China, is finally taking its toll and manifesting in the state of our financial market,” according to Dr. Michael Batu, Economist.
The Bangko Sentral ng Pilipinas will move to mitigate its effects on the economy.
But according to Dr. Batu, expect inflation to rise, prices of goods to increase, and the crisis in the country to worsen.
“They don’t want to let the exchange rate exceed 60 pesos per US Dollar. This means dollars are leaving, so the Central Bank intervenes. This means, Atty., when the dollar strengthens, the peso weakens… the cost of imports, especially food and petroleum products, rises,” Batu said.
This is the second time the Philippine economy has experienced this under the Marcos Jr administration.
The peso-dollar exchange rate previously fell on November 7, 2022.
Batu warned that the current economic conditions could lead to the downfall of the Marcos Jr. administration.
And will only exacerbate the current hunger rate in the country.
“These occurrences—plummeting exchange rates, falling stock exchange, inflation—these lead to poverty and hunger… These are the necessary conditions for societal upheaval. People become discontented,” Batu added.
Batu said that it’s also possible for the administration to suffer the same fate as the leaders did during the final stages of the Asian financial crisis in the late 1990s.
That’s if the government’s economic team fails to come up with a sensible solution, and would merely rely on what Batu called textbook economics—economic forecasts that are far from what actually happens on the ground.
“If they don’t focus on this, you know, it happened twice before, but if this continues, this government will likely have the same fate as what happened with Indonesia in 1998,” he concluded.
