While Thailand slows, solid GDP growth is forecast for Malaysia and Indonesia. Normally perceived as weak currency, it has held up pretty well. The peso is overvalued. The government has long allowed market forces to determine exchange rates, intervening only to smooth wild fluctuations. But for the past year, the currency had been virtually pegged at 26.30 to 26.40 pesos to the dollar, raising questions about its true value.
Manila seems determined to keep it at that level.
The government is using interest rates to discourage speculators. But like Thailand, the Philippines must be careful not to throttle economic growth with super-high lending rates. As it is, manufacturing expansion is stalling. But a significant part of the dollar inflow comes from Filipinos working abroad, an income source vulnerable to policy and political changes in the host countries. But it could go lower, depending on the Thai currency's movements.