Monday, November 26, 2007

Stronger Peso and the Need for More Dollars

From P56 three years ago, it’s now down to P42.85 a dollar. Good news or bad news?

Is there really a strengthening of the peso? Economists say that the $14.6B OFW remittances in 2006 (and growing more in 2007) buoyed the value of the peso. And they say it’s good for the economy. Thanks to our New Heroes! Along with their families’ improved conditions, needs also increase. With this, they are more likely to pour in more dollars.

But what about inflation and the rising prices of fuel? What about our own export industry?

Imagine if it were at P56 to a dollar rate. Juan’s $500 remittance is equivalent to P28,000. His wife in the Philippines spends it for Junior’s and his siblings’ tuition, food, house maintenance, etc… Then the peso rose to P42.85. To be able to cover the same expenses, Juan needs to remit $653.54 or an increase of 31%. But it’s actually not enough. We all know of the rising prices, inflation, and all the other problems the government tried to downplay.

Now for the exporter, he earns lesser compared to what he earns before. The prices of these export goods are controlled by the market, hence, the exporter doesn’t really have a say on the price. With the increasing costs, margins become thinner and may even be totally eliminated forcing some to close shop.

But what did the government do? Are there any safety nets for who are badly affected by this rise of our currency? Perhaps now, our best exports are our people. Call it brain-drain or whatever. It seems that nobody cares anymore. We have plenty of RNs yet hospitals lack nurses. We have plenty of CPAs yet there seems to be a shortage.

Who among my PwC buddies remained here? Sadly, only a few of us are left here. Almost all of my wife’s classmates in nursing already left the country and found greener pasture abroad. Who’s gonna prevent us from seeking employment outside the country? The government even encourages it. And, yeah, we need more dollars to survive in this country.

7 comments:

Annamanila said...

Confusing, isn't it? Damn if the peso rises and damn if it falls. On one hand, we can buy more oil and other imports. On the other hand, exporters and OFWs earn less.

I heard of safety nets too being laid in place by the Central Bank. I don;t understand the financial technicalities. But I guess the government recognizes that the dollar earning sectors need to be protected.

I got a few hundred dollars in my meager account and I guess I am a little bit poorer. :)

jho said...

hindi ko nga maiintindihan ang ating bansa. Gumaganda nga ang takbo ng piso kumpara sa dolyar PERO bakit ang bilihin tumataas lalo? Diba dabat bumaba siya?

lazarus said...

anna, there's no stopping the OFW's from sending money. And the government is investing abroad. It's cheaper now to buy in dollars.

jho, majority of the people don't understand the effect of this strong peso. Ako, I don't really feel it.

Rey said...

True. Even if the peso get "stronger" as they say, the prices and inflation continues to balloon. The only one affected is the exchange of the remittance which we need to put more.

gbert said...

i think one of the reasons also that the peso become stronger is the weakening of the us economy.. i can always feel when the peso value increases, which means, my sis abroad has less to send... that's why am not sure if i'd be happy if the peso strengthens...

lazarus said...

rey, even if you send the same amount, the recipient would say na it's kulang pa rin.

gbert, that is one of the reasons. Feds floated its rate again to avert possible recession of the US economy. The dollar's value is weakening against other major currencies. But yung affected talaga ay yung nasa pinas.

Black_Mamba said...

No matter how we Filipinos sum it up, it doesn't make sense. As in walang ka sense sense. Kahit pa anong ipamukha ng gobyerno na para bang sila ang dapat ipagbunyi sa pagtaas ng piso. Mataas nga piso pero ke taas taas naman ng presyo ng gasolina at mga bilihin. Oo nga at talagang malakas ang hinina ng dolyar pero wala naman nagawa yung mga nakuklok sa pwesto para masabayan yun ng pabor sa mga Filipino. Hay naku, onli in da Pilipins...............