‘Peso to recover after Iraq crisis’

As the peso continues to sink against the dollar, Malacañang remained optimistic that the foreign exchange rate will improve once the Middle East crisis eases.

"The biggest factor in the peso-dollar exchange rate, of course, is the war jitters," Presidential Spokesman Ignacio Bunye told a press briefing.

The peso plunged to 54.32 against the dollar last Monday, its lowest since President Arroyo took office in January 2001.

"It’s not only, however, the Philippine peso that has been falling, but currencies of other countries were also feeling the pinch. Hopefully, it will get back to normal after the Middle East crisis," Bunye said, referring to the standoff between the United States and Iraq.

National Economic and Development Authority chief Romulo Neri earlier said the government cannot do anything to prevent the foreign exchange rate from falling unless the Middle East crisis abates.

Neri also attributed the peso’s performance to the uncertainty caused by the possibility of sanctions on the Philippines by the Financial Action Task Force (FATF).

The Paris-based global money laundering watchdog recently told its members to impose counter-measures against the Philippines after Congress failed to make amendments sought by the FATF to the country’s anti-money laundering law, also known as Republic 9160.

The sanctions will take effect on March 15 unless Congress passes the amendments.

Officials earlier voiced concern that a war in the Middle East might cause crude oil prices to go up, which might eventually cause prices of basic commodities to shoot up as well.

Mrs. Arroyo earlier said she expected the Iraq crisis to be "short and temporary" and urged the transport sector to bear with higher costs for the time being.

"The coming weeks will call for sacrifice, fortitude and cooperation from all of us," Mrs. Arroyo said. "In this critical time, I thank the transport sector for being Filipinos first and foremost before being representatives of any sector."

Bus firms have petitioned government regulators to allow them to raise fares after pump prices soared to an all-time high amid global expectation that the United States and its allies would attack Iraq shortly.

The Philippines imports most of its oil from the Middle East.

"Artificial pressures brought on by the crisis, not real supply-side shortages, cause the prices of crude to rise temporarily," Mrs. Arroyo said.

"A fare hike petition now may add to instability and social unrest. A fare hike is usually followed by increases in prices of basic commodities," she added.

Manufacturers of basic goods have assured the government that they would hold prices even as the threat of war between the United States and Iraq continues to loom.

Trade and Industry Secretary Manuel Roxas II said government agencies have already drawn up emergency measures to ensure a steady supply of basic commodities and that prices remain stable in case a war in the Middle East erupts.

Roxas said that "we are still hoping for the best, but we also want to ensure that there is no chaos if war happens."

Prices of basic goods "may be affected if transportation fare increases, which also lead to wage increases," Roxas said. "We do not really know up to how long or how far our manufacturers can absorb losses."