In the late 1950s, the exchange rate for the Philippine peso against the U.S. dollar was 2 to 1. Because the
|Exchange rates: Philippines|
|Philippine pesos (P) per US$1|
|SOURCE: CIA World Factbook 2001 [ONLINE].|
country's economy was undermined by flawed economic policies, innumerable political crises, and a ballooning foreign debt, the peso continued to weaken so that by 1972, the average exchange rate was P6.67 to $1 and, by 1982, at P8.54 to $1. By 1986, the peso had depreciated (lost its value) further and the average exchange rate was P20.39 to US$1, sinking to P40.8 during the 1997 Asian financial crisis. In 2000, at the height of the political crisis that hit the Estrada administration, the peso hit rock bottom at P55 to US$1. Immediately upon Estrada's ouster, the peso gained strength against the U.S. dollar and stabilized at the average exchange rate of P48.50 to a dollar.
In the late 1980s, the government began a series of financial reforms aimed at strengthening the banking sector. One of the most important was the restructuring and infusion of fresh capital to the nation's central bank, Bangko Sentral ng Pilipinas, which had become bankrupt following successive political and economic crises in the 1980s. Under the New Central Bank Act of 1993, the central bank was granted "increased fiscal and administrative autonomy (self-government) from other sectors of the government." The act also prohibits the Central Bank from engaging in development banking or financing.
The most important of the agencies overseeing the monetary policy of the Philippines are the Department of Finance, the Department of Budget and Management, and the Bangko Sentral ng Pilipinas (Central Bank of the Philippines).
The Department of Finance is the government's central finance office, which manages and mobilizes resources to insure that government policies inspire confidence in foreign investors. This Department manages the bureaus of Internal Revenue, Customs, Treasury and Local Government Finance, and supervises the Securities and Exchange Commission and the Philippine Deposit Insurance Corporation, charged with overseeing the stock market and guaranteeing bank deposits. The Department of Budget and Management is responsible for the formulation and implementation of the national budget and for the sound utilization of government funds to achieve the country's development goals. The re-organized Bangko Sentral ng Pilipinas conducts monetary policy, issues currency, supervises lending to other banks and the government, manages foreign currency reserves, determines exchange rate policy, and provides other banking functions to the government.