The Philippine market condition is turbulent, yet peso currency remains strong. If you are in the dollar earning sector, stronger peso means lower earnings. However, a strong peso also means cheaper foreign debt payments and cheaper imported goods such as food and fuel that brings positive news for the Philippine economy.
The strongest level that the peso currency has achieved so far this year has been recorded Friday closing at Php45.87 to $1; and ING, the Dutch financial company disclosed that by the end of the year the peso is expected to close at Php46.80 to $1.
The strength of the peso currency rests largely on overseas remittances, according to ING. Overseas Filipino Workers have long been the source of a steady dollar stream. Recently, the increase of outsourcing contracts have significantly contributed to the growing source of income stream in foreign currency entering the country.
But there are painful implications…
More than US$40 billion every year is brought into the country either by Filipinos working overseas or Filipinos working in the Philippines for outsourcing firms. The strength of the peso currency brings painful implications, according to Reuters report.
Strong peso currency means that it could spoil growth in the manufacturing industry. The export business suffers most as the peso appreciates. Local manufacturers suffer the most as the peso strengthens because domestically produced goods become more expensive as compared to imported products. Therefore, it is important to resolve expensive manufacturing costs to remain competitive in the world market.
The debate on strong peso vs weak peso continues. Which is better for the Philippine economy?