That sinking feeling
And what have investors watched all year? A pork barrel scandal worth over a trillion pesos. A parade of officials named and renamed in hearing after hearing.
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And what have investors watched all year? A pork barrel scandal worth over a trillion pesos. A parade of officials named and renamed in hearing after hearing.
The peso has recently slipped to a new record low of P62.565 per dollar and by year’s end, the forecast is for the exchange rate to hit an unprecedented P63.
The easy explanation is always the same: Blame the Federal Reserve, blame American interest rates, blame the Middle East conflict and any other conflicts beyond our shores. While it is a convenient story, it’s incomplete.
The peso isn’t simply reacting to Washington, but to a government paralyzed by scandal and a budget process no one trusts. Billions of pesos vanished into flood control projects that were never built, which is inarguably part of the homegrown political rot, and the market knows it.
Currency is all about confidence, priced in real time. Investors don’t just watch interest rate differentials; they watch institutions and whether a government can manage its own money without stealing it.
And what have investors watched all year? A pork barrel scandal worth over a trillion pesos. A parade of officials named and renamed in hearing after hearing.
A Senate consumed by its own leadership wars instead of the nation’s finances and the impeachment trial of the second-highest official in government. None of this is priced into the due diligence report, but it factors into the peso’s daily fluctuations.
When a government cannot account for its own spending, borrowing becomes more expensive, which then makes the deficit grow.
When the fiscal gap grows, the government leans harder on debt and every peso borrowed to cover a hole dug by corruption is a peso that weakens the currency further, a domestic decision and development repeated every budget cycle.
Consider the flood control money: billions of pesos were supposedly spent, yet the floods still came. Projects existed on paper and nowhere else. To this day, token personalities were prosecuted among those suspected of stealing from the budget.
Conveniently left out of the standard narrative is that the trade imbalance so often cited as the peso’s true enemy is itself worsened by domestic chaos.
Every day that passes without a conviction is a guarantee card for the next official tempted to skim a flood control budget, because the worst that happens is a subpoena. That is not a deterrent. That is an invitation.
And every time it rains, the nation is reminded of this aberration: leaders entrusted with the greater good are themselves under the lens for corruption.
Investment that could strengthen local industry, that could build the value-added exports the country desperately needs, stays away from a country where public funds disappear into private pockets. Capital goes where governance is credible.
It is fleeing Manila’s credibility problem, not merely following Washington’s interest rate.
Ordinary Filipinos are thus penalized twice, with higher prices because the peso is weak.
The fix, then, starts with a budget that is scrutinized peso by peso, not rubber-stamped after being loaded with pork projects. It starts with jailing those responsible for stolen flood control funds.
Until that happens, no interest-rate adjustment will save the peso. The currency is only a mirror. It reflects what the market sees when it looks at how this country governs itself.
Right now, the weak peso is pricing political dysfunction.
