Strong peso hurting P&G exports

The continued strengthening of the peso is putting pressure on the exports of global consumer goods giant Procter & Gamble (P&G), a top company official said.

“Our exports are becoming uncompetitive because of the strong peso. It’s getting tricky,” P&G Philippines president James M. Lafferty said in an interview.

The peso closed yesterday at a near seven-year high of 45.62 to a dollar.

Lafferty said locally-manufactured P&G products even have to compete with P&G products made from other countries. “I compete with other P&G brands and the strong peso puts pressure,” he explained.

However, he assured that the continued appreciation of the local currency  has not curtailed their exports. 

Earlier, a group of exporters said they are absorbing billions of pesos in losses each month as locally-made goods become more expensive to foreign buyers. 

“We are losing P4.5 billion every month ever since the peso grew stronger,” Philippine Exporters Confederation Inc. (Philexport) president Sergio Ortiz-Luis Jr. told The STAR in an interview. 

Ortiz-Luis said the multi-billion losses resulted from foregone orders and other missed opportunities, pointing out that the industry is already taking a beating as the peso continues to gain strength against the greenback.

“I don’t know how to react. We are all affected. A number of small and medium sized firms have even stopped taking orders,” Ortiz-Luis lamented. He added some small and medium-sized exporters have resorted to cutting orders to cope with the strong peso-dollar exchange rate.

Ortiz-Luis said they are hopeful the exchange rate will reach P49.50 to a dollar soon. We hope it will happen soon enough so we will enjoy better exchange rate.”

Aside from exporters, Ortiz-Luis said overseas Filipino workers (OFWs) are likewise affected by the appreciating peso. “At a certain point, they (OFWs) will think it is not worth it anymore and they will come back,” he warned.

However, he said the “abnormal situation” caused by people speculating on the dollar is not permanent. “It will end when the speculators have stopped selling their dollar reserves,” Ortiz-Luis said.

According to him, the perception of many is that the dollar will further weaken. On the contrary, Ortiz-Luis, a former banker, said he does not expect the situation to last long. “When the speculators hit their target the exchange rate will normalize.”