Friday, June 06, 2008 Bizmen: Weakening peso a breathing space
THE head of the Association of Negros Producers (ANP) considered the present peso to the US dollar exchange rate a mere "breathing space," adding the "seemingly appreciating" US dollars is a "no win" to Negros exporters.
Mary Ann Colmenares explained that at least, the peso to the US dollar is closing at P43.75 compared to the previous forecast of P39 to US$1. "Otherwise, this could force many non-traditional Negrense exporters to close down."
Exporters gain when the peso weakens against the dollars but lose if the peso strengthens, as experienced on late part of 2007 to early part of 2008, considering that exporters do their trade using the US currency.
Colmenares is upbeat if the other forecast of P45 to US$1 level would be achieved. "We cannot predict, however, with precision since the Philippine exchange rate is pegged to the market mechanism of the dollar. For now, we have no reliable information why certain fluctuation is experienced."
She said she was a bit surprised by the current situation since the Bangko Sentral ng Pilipinas (BSP) disclosed that domestic liquidity (M3) grew by 9.6 percent year-on-year March 2008, up from 6.6 percent in February 2007, a sustained overseas remittances and a steady 6 percent export growth, which means dollars are available in circulation.
She speculated that the dollar exchange rate is on the uptrend, most likely caused by the state of world and US economies. "Hope we have the right information now."
Exchange rate aside, Colmenares, however, lamented that while the US dollar is gaining some weight, the exporters' inputs of production go unpredictably higher.
"None of our inputs are going down. Imported raw materials are going up, labor is demanding wage increases, prices of fuel and power are rising in a matter of weeks," she added: "What do we earn with the dollar strength? We are still in a 'no win-win situation' but (I'm) thankful that the present exchange level is higher."
Meanwhile, Negros Showroom operations manager Kathleen Trebol said the dynamics of the foreign exchange is "a factor" but not "the factor." This means, "our best effort is still focused on quality and its corresponding prices and our strategy is direct marketing. We literally bring in people to the Showroom, we collaborate with government, hotel, resorts and restaurant associations and we send our members to attend seminars and training here and abroad."
"Collaboration results in right information, right knowledge and right connection. We believe quality sells more than anything else," she added.
Negros Showroom is the retail outlet and marketing arm of the ANP.
Colmenares and Trebol agree with the BSP's April 2008 statement that the national government needs to assist affected sectors by addressing power and infrastructure issues. This could have a long-lasting impact on raising the competitiveness of the Philippine industries.
The BSP statements include the construction of ports, roads and highways, railways and airports, which, if not done, would not stimulate trade and investment. "And the country loses out of its international competitiveness." (Gil Alfredo Severino)
