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AS more
exporters sidestepped the central bank’s call for them
to be more competitive instead of badgering government
for greater protection from the impact of a strong peso,
industrialist and consumer watch advocate Raul
Concepcion offered his own suggestion on Monday. It is
now time, he said, for government to make some
interventions that would allow the exchange rate to play
within the range of low-P47 to high-P48 per dollar.
Concepcion
told reporters that pegging the trend of the exchange
rate within this narrow band will promote predictability
and allow businesses to look ahead and plan better.
At this
time,
Concepcion said businessmen are very cautious because there is a
possibility the peso would continue appreciating and
then suddenly correct itself back to P47 or P48 to the
dollar.
The
danger is there,
Concepcion said, because the rise of the peso is also largely due to
the hot money being put into the stock market.
“Most of
this money coming in here is hot money. Hot money comes
in, hot money goes out. When they go to the stocks, and
they see they’re making money, they’ll sell these
stocks, and our foreign exchange will drop,” he said.
Concepcion
said one way to intervene is for the Bangko Sentral ng
Pilipinas to increase interest rates, although he did
not elaborate.
He,
however, stressed that right now, all the banks, the
multinationals, put all their money because they’re
getting good interest rates.
Surely,
Concepcion said, the economic managers, the National
Economic and Development Authority and the Bangko
Sentral are aware of this and know what steps should be
taken.
“It is
better that there is no volatility but predictability,
you see the movement, you make it predictable,”
Concepcion
said.
In a
separate development, seaweed processors on Monday
warned the government they may be forced to shut down or
stop buying seaweed if only to cope with the continuous
strengthening of the peso, which they blame for their
reduced profits.
The
Seaweed Industry Association of the Philippines said a
stronger peso may be bearable if the government provides
them with all the necessary incentives.
“We are
having a hard time coping with the strong peso. We find
it depressing that the Philippine government appears to
be quite detached from the plight of its exporters,”
said association president Benson Dakay.
He aired
the sector’s complaint just two days after the deputy
governor of the Bangko Sentral ng Pilipinas strongly
admonished exporters to seek ways to be more competitive
and learn to hedge against foreign-exchange losses,
saying such hedging facilities can be easily accessed in
banks with a derivative license.
All they
have to do, said BSP deputy governor Diwa Guinigundo, is
go to such banks “and buy a premium on the insurance
against the losses.”
Guinigundo said, “We’re over that period when government
subsidizes them [exporters]. That’s why we went into
deregulation of power and other utilities. The private
sector should be robust enough regardless of whether the
government gives subsidies or not.”
From a
foreign exchange rate of about P55 to the American
greenback in late 2005, the peso is now threatening to
breach the P45 level.
Dakay
said that with lack of government support and unfair
competition from China, the situation “is beginning to
break the backs of seaweed processors, especially
small-scale ones.”
As an
initial measure, Dakay proposed that local processors
reduce their buying price of raw seaweed to P30 per kilo
from P40 a kilo. “It is no longer viable for us to
continue buying seaweed at a premium price when we can
barely recover our investment.” |
