EXPORTERS stood firm with their growth forecasts this year, in spite of the continuous weakening of the peso against the dollar.
The Semiconductors and Electronics Industries in the Philippines Foundation Inc. (Seipi), for one, maintained its 6-percent growth forecast will stay even if the country’s legal tender underperforms for the entire year. A weaker peso favors exporters because it has the potential to expand their revenues.
“We will stick to our 6-percent forecast for the year, unless there is a compelling reason [not to],” Seipi President Danilo C. Lachica told the BusinessMirror. “The peso may fluctuate throughout the year.”
Indeed, the local currency sought to recover on Tuesday after hitting its lowest level in more than 11 years on Monday’s trade.
Data from the PDS Group showed the peso closed trade at P52.24 to a dollar on February 20, correcting by 10 centavos from the P52.34-to-a-dollar on Monday.
The traded volume remained slightly elevated, albeit lower than Monday’s $1 billion, at $977.8 million.
Monday’s weakness was attributed to local developments, particularly the seeming dovish tone of the Bangko Sentral ng Pilipinas (BSP). The peso’s value on February 19 reflected its July 19, 2006, level when it hit P52.745 against the greenback.
But Philippine Exporters Confederation Inc. President Sergio R. Ortiz-Luis said exporters should not get all too excited about the underperforming peso.
“The exchange rate is not a big factor to exports growth,” he told the BusinessMirror. “It helps to provide some strength to the exports but it is not very material in relation to the entire growth.”
Ortiz-Luis said as long as the peso plays within the range of P50 to P52, exporters will not feel the impact of its underperformance. However, if it underperforms in such a manner that it hits P54 to P56 without fluctuating in the process—which, he said, is impossible—that may push the exports industry to grow rapidly than expected.
“A lot of people are putting too much weight on exchange rate as the one that will drive exports, but actually it is only one of those,” Ortiz-Luis said. “Its fluctuation is just one of the many movements driving change in the industry.”
One of the drivers that changed the temperature, at least in the finance sector, was when the BSP pulled a surprise move last week to cut banks’ reserve requirement ratio by 1 percent, effectively releasing around P70 billion to P90 billion of liquidity from the BSP’s vaults into the local cash stream.
Economists have said such move has been translated by markets as a dovish bias and that economic managers are tolerating a weaker peso amid rising inflation.
With Elijah Felice E. Rosales