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There are two conflicting stories came out in a national paper this week. One announced that the exporters badly damaged the appreciating peso, while the other claims, Bangko Sentral ng Pilipinas to (BSP) claims that the strengthening currency benefit the Philippine economy. These stories seem to tell the Filipinos that we do not know our cake and eat it too. If you have a good effect, there is a sufficient draw back. Take the first claim. There are two types of exporters. One of his business of raw materials, process and export the finished product. The other is the one who buys, or produce raw materials locally, process, and export the results. In the first case, we export just work. Second, we export labor and raw materials into a finished product of labor. When the peso weak peso spend more to buy raw materials. The product is sold to earn a strong dollar. Then the workers will be paid a weak peso.
obtaining commodity
When the peso is strong, fewer pesos will be spent. Then, the finished product is sold finder weak dollar. There will be no more dollars to pay for labor strong peso. We are afraid we are exporters of finished products will be less competitive in world markets, a strong peso increases the production costs. The labor costs are rising, because there will be more dollars need to convert pesos to be paid to workers. How will it affect the export processing zones. Finished products will be less competitive in world markets. Profits dive and to close the plants.
On the other hand, the quality of the world market ascends peso. We need fewer pesos to service the external debt in dollars. There will be more investors coming because they earn more than when the peso weak. Philippine economy will be stronger. There will be more investors coming because of the strong peso gained compensated for their efforts. The BSP claims that the peso attack, but it is temporary. The market forces will eventually force the peso to find its level. Foreign workers are responsible for the strong peso. When remittances will slow the peso depreciation. There is a tendency that the foreign workers living permanently in the place where the work is, if the government allows the country.
The sad part of the business, even if the peso appreciates that never felt locally. Take, for example oil products. If the world market of liquefied gas increases, local prices will rise with you. If you fall in the peso price of liquefied petroleum gas (LPG) will remain the same. Even if the peso appreciates, there is still no roll back LPG prices. There must be something wrong with the economy.
Perhaps it would be much grateful to the peso appreciates. We are an importing country. Since birth we have been conditioned to believe that anything imported high. Imported wines, whiskey, cigarettes, chocolate, perfume and cars evaluated more than local products. The appreciating peso and the General Agreement on Tariffs and Trade all imported luxury now within reach of the locals. The dollar received goes out again. The foreign workers will stay, if not forever, just to keep the economy afloat. While holding the woman did not bring an action to maintain.
The economic planners to pull together the facts. They still are not aware that the strong peso affects the small and medium businesses. If there is any benefit to the fluctuating currency, the impact is felt locally in any way the locals would otherwise never be able to benefit from the situation. The surging peso helpful or harmful?
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Source by Joe Espiritu