Exporters on a ‘wait and see’ following peso’s 7-year plunge

CEBU, Philippines - While a weak Philippine peso spells good news for the export industry, Filipino exporters however are still on a ‘wait and see’ as a strong dollar does not necessarily mean a recovery of export demand.

Philexport-Cebu president Nelson Bascones said that the value of export revenues could go up as the peso weakens, but what is important for exporters is sustained recovery of the export sector, backed up by strong government support.

Aside from exporters, the weakening of the peso against the dollar is seen to benefit the families of OFWs, Business Process Outsourcing (BPO) and tourism sectors.

In a statement, DTI Secretary Ramon Lopez said that the peso depreciation was less than five percent and would still have a minimal effect in the production costs of most consumer goods.

However, the DTI chief admitted that to a certain extent, a weak peso might put a possible cost pressure on goods with import component.

According to Lopez, the downward spiral of the peso is still gradual and would not have a significant impact on prices unless currency depreciation doubles.

He added that this development could promote exports and consumption due to (increased value of) dollar remittances from OFWs,” he said.

Lopez said for exporters, a slight depreciation could mean that exports will be more competitive in terms of dollar pricing "because they get more for every dollar. This could help encourage and grow our exports,”

On Monday, the peso closed at 48.25 to a dollar, a seven-year low since it closed to 48.335 on Sept. 15, 2009. This was reportedly due to investor concerns on the Duterte administration’s war on drugs coupled with external developments causing global uncertainty.

Philippine Statistics Authority ((PSA) record showed that the Philippines’ export   sales posted  an 11 percent decrease in the first six months of this year, to $4.754 billion in June 2016, from $5.364 billion recorded value in June 2015.

The decrease was attributed to nine major commodities out of the top 10n export commodities for the month.  These include other mineral products (-41.1 percent); machinery and transport equipment (-31.6 percent); other manufactures (-26.1 percent); chemicals (-25.7 percent); woodcrafts and furniture (-19.2 percent); ignition wiring set and other wiring sets used in vehicles, aircrafts and ships (-10.2 percent); electronic products (-5.1 percent); metal components (-2.2 percent); and coconut oil (-2.0 percent).

Furthermore, total merchandise exports for the period January to June 2016 registered a 7.5 percent decrease from $29.002 billion in 2015 to $26.832 billion in the same period of 2016. (FREEMAN)