The Department of Finance (DOF) has expressed optimism that the Philippines can ride out the current volatility of financial markets as the US Federal Reserve moves closer to normalization.

Finance Undersecretary Gil Beltran cited the "strong" Philippine stock market and the gross international reserves.

He also said that the Bangko Sentral ng Pilipinas could take the peso depreciation as the opportunity to further boost its current reserve holdings, while sustaining the competitiveness of exports. The peso has breached 48 level to US dollar.

“The country's strong reserve position, its healthy banking system and profitable corporates should help the country avoid the deleterious effects of financial volatility from the Fed normalization,” Beltran said in a report to Finance Secretary Carlos Dominguez III.

He said the Philippine gauge soared 11.7 percent year-to-date, almost thrice the 4.4 percent average of 11 countries, behind Indonesia (19.12 percent), Thailand (16.57 percent) and India (12.09 percent).

The Philippine Stock Exchange index also performed better compared to China (-13.86 percent), Japan (-13.03 percent), Malaysia (-1.74 percent), Singapore (-0.89 percent), Vietnam (P4.28 percent), South Korea (4.92 percent), and Hong Kong (9.24 percent), Beltran said.

The BSP’s gross intentional reserves also remained strong, standing at P85.9 billion as of August this year, which can cover 10.5 months’ worth of imports of goods as well as payments of services and income.

“The BSP’s current reserve level also stands very comfortable than other Asian central banks,” said Beltran.

Indonesia’s buffer for the economy can only cover 3.9 months’ worth of import duties, Malaysia has 5.4 months, while Singapore got 6.3 months.

South Korea has 6.1 months buffer, Taiwan secured 1.5 months, while India has 6.9 months, and Vietnam with 2.3 months.

Beltran said “the country’s GIR is also better compared to the ASEAN-6 with 6.5 months buffer, and ASEAN-5’s 5.7 months worth import duties.

“Economic reforms should continue to be implemented to boost growth and the country's fundamentals should continue to be protected to sustain investor confidence,” he dded.

The DOF has been pushing in Congress the approval of the Tax Reform for Acceleration and Inclusion Act, which includes the adoption of a modified gross system for the personal income tax; and measures to broaden the value added tax base, adjust the excise tax on petroleum products, and restructure the tax on automobiles, except for buses, trucks, cargo vans, jeepneys, jeep substitutes and special purpose vehicles. DMS