The article reviews a study by Dani Rodrik on the impact of an undervalued currency on the performance of economies. The study’s finding is clear-cut: that an undervalued currency has a causal impact on growth. The finding challenges the preference of the Philippine government and the Bangko Sentral ng Pilipinas (BSP) for an appreciating peso to stymied inflation. It then points to studies, which show that inflation-targeting is not an iron-clad rule and calls for a reevaluation of government’s stance on monetary policy.
