Sunday, July 08, 2007 Strong peso now hurting electronics exports: group
THE largest segment of the export sector, electronics, has also been hurting from the appreciating peso, its mother organization, the Semiconductors and Electronics Industry of the Philippines Inc. (Seipi) admitted recently.
The peso breached the P46 to the dollar barrier middle of this week to below P46 to the dollar but retreated back before the weekend.
The dollar has lost 17 percent of its value against the peso from June 2006 to June 2007 equivalent to P7 per dollar in peso appreciation.
Seipi president Ernesto Santiago told Philexport News and Features they have made representations with the Bangko Sentral ng Pilipinas (BSP) and the Department of Trade and Industry (DTI), expressing their grave concern over the continued strengthening of the peso against the US dollar.
Contributing over 60 percent of monthly export revenues, Seipi was the latest among exporting organizations to ask government to rein in the continued rise of the peso as it reportedly resulted in heavy exchange rate losses.
Indigenous exporters that included food, handicrafts, furniture, holiday décor, fishery products that sourced their raw materials locally, have claimed they incurred losses at an average of P2.5 billion a month since January this year.
The food sector has been particularly hit as exports started contracting since the month of April.
They said they are now hesitant to accept new orders as they fear more losses in the future would be incurred if the peso continues to gain value over the greenbuck.
Seipi officials said they have not yet come out with estimates on actual losses brought about by the strengthening peso but said they have also been hurting.
They explained that although a big bulk of their raw materials are bought in dollars and therefore revenue neutral, their operational expenses including the cost of labor and electricity are peso denominated and are therefore getting more expensive.
To cushion the impact of the strengthening peso, the Development Bank of the Philippines (DBP) recently launched its foreign exchange hedging facility exclusively tailored for embattled exporters. DBP got a provisional permit from BSP for its hedging facility last week.
A new derivative financing service, foreign exchange hedging has yet to be sold for its benefit to exporters and get accepted by its intended beneficiaries in the Philippines.
In the meantime, the exporters have appealed to the BSP for a more stable exchange rate so they can accurately price their products without risking heavy future losses. (Abe P. Belena/Philexport News and Features/Sunnex)
