Name: Garcia, Darlene Joyce S.

Subject: AE104 Date: January 17 2023

Section: COA BLK 1F-B

According to the Philippines Statistics Authority, annual inflation in the Philippines rose to
8.0% in November, the country's fastest inflation in 14 years since November 2008, owing to
higher food prices. Exchange rate movements can have an impact on both actual inflation and
future price movements. Changes in the exchange rate have a direct impact on domestic prices of
imported goods and services. A stronger peso lowers the peso prices of imported goods and
importintensive services like transportation, lowering the rate of inflation.
A weak peso can increase the external price competitiveness of Philippine goods, increasing
the country's export earnings. The peso equivalent of OF remittances in foreign currencies will
rise as the peso depreciates, resulting in more pesos in exchange for one foreign currency unit
(e.g., US$1). Furthermore, tourism and investment activities will grow as it becomes less
expensive and more appealing for foreigners to visit and invest in the Philippines. However,
depreciation of the peso can increase inflationary pressures because it costs more pesos to buy
imported goods and raw materials such as oil and rice.

References:
Q&A on the exchange rate impact how much what we can do and what S next. (n.d.).
Retrieved January 17, 2023, from https://www.bsp.gov.ph/Media_and_Research/Primers
%20Faqs/fximpact.pdf