STRONG PESO IS SUICIDE
MANILA, SEPTEMBER 13, 2010 (MALAYA) BY IRMA ISIP - Exporters yesterday warned that the contintued strengthening of the peso against the US dollar is "suicide."
They said unless steps are taken by the Bangko Sentral ng Pilipinas (BSP), exports will be endangered and the livelihood of OFWs and their families will be threatened.
"Letís not fall into the trap (of believing) that a strong peso means a strong republic," said Sergio Ortiz-Luis, president of the Philippine Exporters Confederation Inc.
He warned of massive layoffs and closures among small and medium enterprises not only among the exporters but also among domestic-oriented manufacturers and agricultural producers.
Ortiz-Luis said at the current exchange rate of P44:$1, even strong dollar-earning sectors like electronics and business processing outsourcing would begin to hurt as a strong peso translates to lesser value for their dollar-denominated revenues.
He said indigenous exporters with no import component would rather not ship out at an exchange rate lower than P46:$1.
Ortiz-Luis said domestic producers cannot afford to compete with imports that are becoming cheaper with the appreciation of the peso.
"This Christmas, for example, lychees and apples would be cheaper than local fruits," he said.
Ortiz-Luis warned of the far-reaching impact of a strong peso, especially for families of OFWs who now have lesser pesos for the same remitted dollars.
"More than half of the economy depends on dollar earners like exporters and overseas remittances. There is a lack of effort to bring peso to its proper exchange rate," said Ortiz-Luis.
He said the BSP has enough tools under its belt to ease the appreciation of the peso.
One is by paying off dollar debts to stimulate demand for the greenback, he said.
Another measure, although drastic, is to lower the interest rate on peso deposits to encourage people to buy dollars, he added.
"There should be a conscious effort to target an accurate exchange rate and accept that the peso is overvalued," Ortiz-Luis said.
Chief News Editor: Sol Jose Vanzi
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