| 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.”
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