Are you ready to get 40 pesos for every dollar by next year? What about 30 pesos per dollar by 2009? Whether it’s a sign from the heavens, what the tarot cards say or a forecasting model, the signs show the peso will continue to strengthen. At least, for now.
Businesses, big and small, cannot escape foreign exchange risks. Doris Dumlao wrote in the Philippine Daily Inquirer early last month that 75 firms, mostly small and medium scale enterprises, have closed shop as the invisible hands of the peso’s sharp appreciation caused owners to surrender to the trend.
Sergio Ortiz-Luiz Jr., president of the Philippine Exporters’ Confederation, has challenged the central bank’s bias for a stronger peso – something that the central bank immediately refuted. Finger-pointing, however, cannot solve the issue. Almost all currencies are strengthening against the US dollar.
Entrepreneurs need to face the problem. No one can afford to ignore it in the hope that it will go away, or rant and rave at the government asking the State to fix the exchange rate. The hard questions still need to be answered: what is the smart way to handle foreign exchange risks? Should exporters move to other ‘safer’ businesses? Are there hedging instruments available that can help? Is your banker helping you?
Entrepreneurship is leadership taken to the extreme. That means having the tenacity to find the door that should open after the one you just got into slammed in your face. Ultimately, it’s the ability to find opportunities in every crisis.
Trite, yes, but still so true.
October 4th, 2007 at 8:29 pm
To Ric and Dit, there really is widespread complaint about the current level of the peso against the dollar. From what I hear, the central bank is hard pressed to respond to all these complaints, hence the forum they scheduled today. I remember during the 1997 crisis, we also had to be at these very heated forums, and guess who were there complaining? Exporters who were clamoring for a fixed exchange rate because the peso suddenly moved from 26 to 40! I remember at the time that they said the level itself was not the issue but the volatility. It was a colorful time, and we had lots of memorable moments we could only appreciate AFTER the country got used to the market-driven exchange rate.
October 4th, 2007 at 8:24 pm
farwaniya, that’s a valid question but you might want to check the discussion now at MoneySmarts, our blog on personal finance. Here’s the link: http://www.inquirerbloggers.net/moneysmarts.
Happy reading.
October 4th, 2007 at 8:21 pm
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October 4th, 2007 at 4:55 pm
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October 4th, 2007 at 10:30 am
I do believe that there are always pros and cons concerning the argument. A stop gap solution is needed but the question is, are this solutions available and is being provided by the government???