Exporters hope for BSP to manage peso strength

CEBU, Philippines - Exporters are hoping that the government through the Bangko Sentral ng Pilipinas (BSP) could continually control the strengthening peso, otherwise the sector will be up for another round of “bloody” battle, while struggling with competition.

In an interview with PhilExport president Sergio R. Ortiz-Luis Jr., he said that while the BSP is trying its best to intervene with the mightier peso, exporters on the other hand are “helpless” in this situation, and will only “cross their fingers” to hope for survival.

He said if the BSP cannot stop the peso appreciation, “then nobody can stop it.”

Earlier, the BSP has admitted that it has been losing money buying and keeping excess dollars entering the country to stem the rapid appreciation of the peso. In fact, in the last couple of years, the country’s Central Bank recorded a loss of P107 billion.

According to Ortiz-Luis, although there was an attempt by the PhilExport board to take a position on the erosion of their competitiveness due to the strong peso, but leaders realized they will sound like broken records if they do so.

In his report to the PhilExport board, trustee Oscar Barrera said that a coalition of dollar earners including deployment agencies of overseas Filipino workers and leaders of the Business Process Outsourcing industry have held dialogues with top government officials including the planning chief and members of the Monetary Board.

It was in one of those meetings when a monetary board member revealed that if the BSP had not intervened in the foreign exchange market, the peso would have reached P38 to the US dollar. 

Barrera said that the next dialogue will be with the National Treasures to convince him to borrow funds from the local banking system or from the BSP to cover the budget deficit and to prepay old loans, instead of borrowing dollars abroad.

While the BSP has indicated its willingness to lend funds to the national government but it is prohibited by the law to directly buy government debt papers.

Significantly, according to Ortiz-Luis most companies in the export sector now do not accept orders if they see that the peso is going stronger beyond the P42.50 per US dollar. He said foreign exchange beyond this level is no longer profitable for exporters.

Meanwhile, economist Bernardo Villegas urged the government to make ways in allowing the peso to weaken, as it brings good to majority of Filipinos.

“Here we are, we keep on calling OFWs heroes and then we make their earnings much less valuable to them by wanting a stronger peso?,” Villegas said.

While the Philippines is slowly losing its strength in export, due to the strong gain of peso against the US dollar, Villegas said that the country should start rediscovering the wealth of the manufacturing sector.

In Cebu, for instance, exporters who are now suffering from uncompetitiveness due to the foreign exchange woes, should slowly divert their businesses to the manufacturing, as the Philippines is seen to have good opportunity in restoring its strength in this sector.

While exporters are hopeless as of this time, opportunity in manufacturing is also opening its doors, Villegas said. (FREEMAN)