Two conflicting narratives came out of a national paper this hebdomad. One announced that exporters are severely hurt by the appreciating peso while the other provinces that the Bangko Sentral ng Pilipinas ( BSP ) claims that the billowy currency is good to the Filipino economic system. Those narratives seem to state the Filipinos that we can non hold our bar and eat it excessively. Whenever there is a good consequence. there is a corresponding draw back. Let us take the first statement. There are two types of exporters. One is who imports natural stuffs. processes it and exports the finished merchandise. The other is one who buys or produces the natural stuff locally. processes it and exports the consequence. In the first instance. we export merely labour. In the 2nd. we export labour and natural stuff converted by labour into finished merchandise. When the peso is weak. more pesos are spent to purchase natural stuffs. The merchandise is sold to gain a strong dollar. Then labour is paid in weak peso.
When the peso is strong. there will be less pesos spent geting natural stuff. Then the finished merchandise is sold gaining weak dollars. There will be more dollars needed to pay labour in strong pesos. What exporters are afraid of is our finished merchandise will be less competitory in the universe market if a strong peso raises production costs. Labor costs will lift because there will be more dollars to be converted to pesos to be spent for labour. What will be affected are the export processing zones. Finished merchandises will be less competitory in the universe market. Net incomes will plunge and mills may shut.
On the other manus. the quality of the peso in the universe market is raised. We will necessitate less pesos to serve our external debt in dollars. There will be more investors coming because they can gain more than when the peso is weak. Filipino economic system will be stronger. There will be more investors coming because the strong peso earned will counterbalance their attempts. The BSP argues that the peso rush is but impermanent. Market forces will finally coerce the peso to seek its degree. Abroad workers are the 1s responsible for the strong peso. When remittals slow down the peso will deprecate. There is a inclination for the abroad workers to populate for good in the topographic point
where they work if the authorities of the state will let.
The sad portion of the concern is that even if the peso appreciates. it is ne’er felt locally. Local monetary values will stay the same. Take for illustration oil merchandises. If the universe market for liquid crude oil gas rises. our local monetary values lift along with it. If it falls the peso monetary value for Liquified Petroleum Gas ( LPG ) will stay the same. Even if the peso appreciates. there is still no axial rotation back in LPG monetary values. There must be something incorrect with our economic sciences.
Possibly we would be much thankful that the peso appreciates. We are an importing state. Since birth we have been conditioned to believe that anything imported is first-class. Imported vinos. whiskies. coffin nails. cocoas. aromas and autos are better appreciated than local merchandises. With the appreciating pesos. plus the General Agreement on Trade and Tariff wholly imported luxuries will now be within the range of the locals. The incoming dollars will travel out once more. Our abroad workers will hold to remain longer if non everlastingly merely to maintain our economic system afloat. While economic system is on the rise. we do non establish steps to maintain it up.
Our economic contrivers must draw their Acts of the Apostless together. We still are non cognizant how the strong peso affects the little and average endeavors. If there is any benefit from the billowy currency. the influence must be felt locally in any manner otherwise the indigens will ne’er be able to profit from the state of affairs. Is the billowing peso good or damaging?