Wednesday, December 05, 2007 ‘P47 to $1 can’t be done’
EXPORTERS should look for other markets apart from the United States and require payments in other strong currencies besides the dollar, an official of the Bangko Sentral ng Pilipinas (BSP) said yesterday.
Juanita Amatong, BSP Monetary Board member and former finance secretary, said Philippine exporters can avoid the effects of the US dollar’s depreciation against the peso by requiring payments in other currencies like the Euro.
She said exporters should also look at other markets since the US market has softened as a result of a slowdown of its economy.
Philippine exporters have been calling on the BSP to intervene and prevent the further appreciation of the peso. The export sector claims that the continued rise of the peso would kill the industry and displace many workers.
An association of gifts, toys and houseware manufacturers and exporters in Cebu has joined other export industry groups in calling the BSP to peg the peso at P47 to the dollar.
But Amatong said pegging the peso to a fixed rate against the dollar, which is what would happen in a fixed-rate regime, would not be market-oriented.
“We’re under a floating (exchange rate) regime. We can’t go back to a fixed-rate system. No one is doing that anymore except Cuba maybe,” she said in an interview, following an information caravan held by the BSP at the Cebu Normal University yesterday.
Policy
The BSP, in one of its policy directions, stressed that the exchange rate will remain market-determined.
During the information caravan forum, Amatong said the peso would have already reached 35 against the dollar had the BSP not bought dollars from the currency market.
“If we had allowed the market to really work, it (exchange rate) would have been P35 to the dollar,” she said.
The peso-dollar exchange rate was around P42.30 to the dollar yesterday.
Like any market, the currency market is affected by supply and demand factors. The peso’s rise is affected mainly by the increase in remittances of overseas Filipinos and the positive investor sentiment on the country’s economy, which meant higher inflow of foreign investments. When families of overseas Filipinos exchange the dollars they receive into peso, they help increase the demand for the currency and make it stronger.
Raquel Claveria of the BSP department of economic research said the central bank also has other programs to help protect the export sector from the effects of the peso’s continued rise.
She said the BSP has set in place a dollar and yen rediscounting facility that allows commercial banks to lend out to exporters. She said the BSP also provided P50 million for the Export Promotion Fund of the Export Development Council. (LAP)
