Effects of a Strong or Weak Philippine Peso Currency Essay

Two conflicting stories came expose of a national paper this week. One announced that exporters be soberly hurt by the appreciating peso while the other states that the Bangko Sentral ng Pilipinas (BSP) claims that the inflate currency is beneficial to the Philippine economy. Those stories seem to tell the Filipinos that we cannot have our legal profession and eat it too. Whe neer in that respect is a good effect, there is a be d b ar back. Let us take the first statement. There ar two types of exporters. One is who imports raw materials, processes it and exports the complete convergence. The other is one who buys or produces the raw material locally, processes it and exports the result. In the first case, we export only project. In the second, we export grok and raw material converted by labor into finished product. When the peso is weak, more pesos atomic number 18 spent to buy raw materials. The product is sold to earn a strong dollar. Then labor is paid in weak peso. When the peso is strong, there testament be less pesos spent acquiring raw material. Then the finished product is sold earning weak dollars. There testament be more dollars indispensable to pay labor in strong pesos. What exporters are afraid of is our finished product will be less matched in the universe of discourse market if a strong peso raises production be. Labor costs will move up because there will be more dollars to be converted to pesos to be spent for labor. What will be affected are the export processing zones. Finished products will be less competitive in the world market. Profits will dive and factories may close.On the other hand, the quality of the peso in the world market is raised. We will need less pesos to service our external debt in dollars. There will be more investors coming because they can earn more than when the peso is weak. Philippine economy will be stronger. There will be more investors coming because the strong peso earned will cover their eff orts. The BSP argues that the peso surge is but temporary. Market contracts will eventually force the peso to seek its level. Overseas workers are the ones responsible for the strong peso. When remittances reluctant down the peso will depreciate. There is a tendency for the oversea workers to live permanently in the placewhere they work if the government of the coarse will allow.The sad part of the business is that even if the peso appreciates, it is neer matte locally. Local prices will remain the same. Take for example crude oil products. If the world market for liquid petroleum gas rises, our local prices rise along with it. If it falls the peso price for Liquified Petroleum bumble (LPG) will remain the same. Even if the peso appreciates, there is still no roll back in LPG prices. There must be something violate with our economics.Perhaps we would be much thankful that the peso appreciates. We are an importation country. Since birth we have been conditioned to believe th at anything imported is excellent. Imported wines, whiskeys, cigarettes, chocolates, perfumes and cars are better appreciated than local products. With the appreciating pesos, plus the General Agreement on Trade and Tariff all imported luxuries will now be within the reach of the locals. The incoming dollars will go out again. Our abroad workers will have to stay longer if not forever vertical to keep our economy afloat. While economy is on the rise, we do not institute measures to keep it up.Our economic planners must pull their acts together. We still are not aware how the strong peso affects the small and medium enterprises. If there is any benefit from the surging currency, the influence must be felt locally in any way otherwise the natives will never be able to benefit from the situation. Is the surging peso beneficial or detrimental?