Economic managers have revised the government’s foreign exchange target for 2017-18 on latest weakness of the local currency given the negative external environment.
Budget and Management Secretary Benjamin Diokno, after the meeting of the inter-agency Development Budget Coordination Committee Tuesday, said the committee has revised the 2017-18 foreign exchange assumption to 48-50 from 45-48 in the earlier projection for 2016-18.
“We are comfortable for the P50 to a dollar as a upper bound assumption for exchange rate because we have a steady inflow of dollars. In the past, we have a crisis in our dollar reserves but that is no longer the case,” Diokno said.
On Tuesday, the local unit finished the trade at 49.99 but touched the 50-level to a greenback mid-trade due to impact of external developments. It started the year at P 47 to a dollar.
The Committee, on the other hand, maintained the target for domestic output and inflation rate.
The gross domestic product (GDP) target for 2016 is a range of six to seven percent while the 2017-22 range is between seven and eight percent.
In the first three quarters this year, the domestic economy expanded by seven percent, with the third quarter print alone at 7.1 percent, the highest in the region.
Inflation target for 2016 to 2018 is between two and four percent. As of last November, inflation remained below target after it averaged at 1.7 percent.
However, inflation has posted upticks and have risen to within-target levels since last September when it rose to 2.3 percent from month-ago’s 1.8 percent. It remained at the said level last October and jumped to 2.5 percent last November.
Inflation fell to below-target levels in May 2015 due to drop in oil prices. It only went up to within the target range last September, in line with monetary officials’ projection, because of hikes of oil prices in the international market and impact of weather disturbances on food supplies, among others.