Forex: Either way, there are cheers and groans

“We can’t please everyone,” our forefathers said so, then. Centuries past and the same admonition remained true and real. Certainly, as generations come and go, it will forever stay. 

For instance, recently, whether in barbershop talks or economic briefings, we didn’t hear anything but complaints about the peso’s deterioration against the US dollar. Hovering around P 50 to a US dollar, it seems like, nobody is happy, not anyone gained.

On the other hand, when it was at its strongest on February 28, 2008 at P40.40460 to a dollar (per OANDA), calls for civil disobedience were even floated. The clamor (particularly, the OFWs) to peg the peso-dollar exchange rate at P55 to a dollar, likewise, mounted. 

Conversely, a little over 10 years ago (on July 17, 2006), when the exchange rate was a seemingly uncontrollable P54.8620 to a dollar, both educated and unschooled critics became instant prophets of doom. 

Doomsayers, as they have always been, were trumpeting here and there that the country was holed into a bottomless pit, a hopeless situation.

Today, as the optimism in the USA rises with the election of Donald Trump as its next president, the peso-dollar exchange rate is, again, slowly tilting in the latter’s favor. 

Thus, exporters, BPOs, etcetera are beginning to rejoice. Importers (except for oil industry players because global prices have remained below $50 per barrel), on the other hand, are starting to feel the pinch.

Undeniably, either way, we shall hear cheers and groans. This is not something unusual though. It doesn’t mean too that we are hard to please. The fact is, wherever our peso goes, we will always hear complaints. In every abrupt fall, a sector gains while another losses. When it goes up sharply, more often, the sector that rejoices in its fall complains. Frankly, Erap aptly said it then, “weather-weather lang”.  

These reactions are not difficult to understand. It all boiled down to preferences.  Similarities can be attributed to a saltbed owner and a rice farmer. They have different preferences.  A saltbed owner rejoices in el niño (long droughts) but gripes in la niña (extended rainy seasons) because long dry spell give him tons of salt while wet seasons melt it. The rice farmer, on the other hand, feels exactly the opposite because droughts empty his barn and rainy days bring him bags of grain. 

So, who really are rejoicing in a strong peso?  On top of the list are importers of surplus items like dump trucks, heavy equipment, generators, AUVs, SUVs and used clothing (ukay-ukay). Apparently, there is one thing common among these importers, they import and sell their wares in the local market. Clearly, they spend in dollars and earn in pesos. Inversely, companies/individuals that/who are earning in dollars and are spending in pesos shall rejoice in a weaker peso. They are exporters that are sourcing out their raw materials and labor in the local market like furniture makers, dried mango processors, BPOs as well as our OFWs.

Simply put, a company is in a better position once it earns in a stronger currency and spends in a weaker one. However, while it may sound counterbalancing considering that in either scenario some benefit and others agonize, we can’t just simply be content and drifts with Erap’s “weather-weather lang.” Knowing fully well, that there is no panacea that can comprehensively solve all our economic woes, the complexities rest not much on the solution (which will favor some sectors) we put in place, but on its impact on those in the receiving end.

Therefore, what is important right now is for our government to use all available options to having a stable peso or a manageable exchange rate. Moreover, they should put in place meaningful cushions that can mitigate whatever negative impact the peso’s movements bring on the “aggrieved sectors.” This way, instead of worrying so much on a very erratic currency, companies/individuals will rather spend time in planning ahead and formulate responsive strategies.

 Indeed, we need to find a “win-win” situation, or else, we find ourselves like drifters who fondly embrace the “weather-weather lang” syndrome.