Good for the peso, bad for business?

Entrepreneurs come up with businesses that fill a need. When the need disappears, the truely resilient ones look for a related need that comes up elsewhere. People will always have needs that no one or too few address: the mark of a true entrepreneur would be the ability to adjust quickly.

Jon, i agree and very well stated. Any idea what businesses will thrive in this kind of environment?

I notice that most of you are concerning about entreprenuers, exporters etc,. what about million of Filipino's people surviving because of salary from their love ones working overseas?

its not a sign that the country will be in progress as i see more people will starve because more ofw will go back to the country..

Stronger peso (or just maybe just a really weak US$) is good for our economy. It's not good for me (...personally - because I earn in USD; I get less Php for the $ but that's fine with me).

Looking at my UITF investments, (man!) It's doing well this past couple of days.

To Jon
What you mention is just a theory without real chance.
Can you explain how an entrepreneur or business, like the very affected furniture exporters, easily can change to producing something else? Throwing away all their investments in machinery and other production matters, retrain all their employees to a complete different work, buy new machines and facilities and absorb all the costs for still to be competetive? What a nonsense.
The same nonsense is the permanent claim that "market forces out of our control" are the reason of the extreme rise of the Peso. Currency values are based on the economic situation and power of countries and there has RP not much positive to show. High poverty rate, high unemployment, total dependance on remittances of OFWs, a phil. currency which is near nowhere accepted for trading, permanent increasing prices in Pesos of even (cheap) Dollar imported goods, a sharply decreased purchase power of the Peso compared to times when the rate has been 55 to the Dollar, what of that should be a basis or reason for a Peso, rising much more to the Dollar than currencies of real economic strong and politically stable countries?
The main reason of the rise is the desire of the administration to show high performance and good governing to future lenders and to impress the voters about a super economy that never reaches the common Filipino since it is rather a fiction. The administration repays loan prematurely, using the cheap Dollars of millions of OFWs whose remittances to their families are now worth 30% less in purchase power, with no mercy to OFWs and their families. If OFWs really would stop remitting in Dollars and change to remitting the local currencies where they work, plus maybe remitting without passing the local banking system, the Dollar would soon be back to a more realistic level and OFWs, their families and the business, esp. the exportin business, would feel happy, jobs would be created (real jobs, not streetsweepers), tourists would come in and tax income would go up. But itseems that the administration is more interested in showing something which is not really existing than caring about people and businesses, except the giant business which profits from high or low Peso rates anyway.
True, other currencies also increased their value against the Dollar, but in such other countries the price of goods imported on Dollars is going down, not up like in RP.
As one example the fuel price. When the Peso rate has been 54 and one barrel 73 Dollar, the Peso price was 3942 per barrel, now with a rate of 45 and one barrel 82 Dolar, the Peso price is 3690 or 252 Peso less. Still the Peso price of oil products increases. Just for big profit, or because the big business knows that the rate is artifically pushed and can crash at any time?
So, how any business and entrepreneur could complete reinvest for a new product, writing off all existing investments as loss (who would buy it if that business is out)? A casual worker can change from being a mason helper to being a plumbers helper, there is no investment to lose but this does not create new jobs and ncome.

A stronger seems inevitable but are our economist study the ill-effect of the general governance of our country? What would the families of the 10 million OFW realize then? Will they live higher or lower standards? Was the strong peso relevant to the money they have sent? What if the OFW began to comeback? Will there be a job for them here? For me, I think our economic gurus must include that point. Would it be possible to provide a cealing on our rates? I believe so because our country must not be totally dependent on the US currency. We should find a good standing on all these and I believe our economic experts from the best university in the Philippines can do that. My best wishes for my beloved country.

There was a time when the peso, compared to dollars, was 65:1.Everybody was complaining. The country is going to the dumps!
Now that the peso is 44:1, some bright guys are complaining. Don't they realize that even the lowly paper clips and toothpicks that they use are imported materials? I don't think the lowly Filipinos use these things anymore.

Would not they be glad, if even in their dreams, that the peso may come to 2:1 or 1:1? Would it be not cheaper to go to US and indulge in buying sprees,as those with colonial/dollar mentality often do?

If that scenario will happen, either our country has become an economic giant or the US has become a third world country like ours.

Salves' last paragraph clearly defines an Entrepreneur... do not pity the OFW's for their declining income coz they are not paying taxes, it is good that the government is doing something to decrease our indebtedness... When OFW's come back they have certainly found a better paying job (better right)...
Ever wonder why the Gokongwei's bussinesses are thriving? they are producing their own raw materials, and transports their own products, walang tapon ang tubo diba...

I agree with Ric in most of his sentiments. True that the so called heroes of our nation's (OFW) family will have a lesser purchasing power if indeed the peso breaks the P35 to a $1 exchange rate. It may hold true that some of the exporters and BPO may suffer from this strengthening of the peso.

However, I disagree that this is pogi points for the government, this is a regional effect on currency because of the crisis affecting USA. If the gov't steps in to control appreciation of the peso then it stands to lose money and may affect its budget deficit. We are now enjoying a "sort of" economic growth and a hopefully a balanced budget in a year or so.

First let me point out, all exports are not 100% local, some have imported components, the effect of the currency appreciation may not be proportional to some products but nonetheless, there are savings in some components of your products. What is at a big disadvantage are the 100% local exporters, gov't offers facilities to prevent forex loss. But the thing is their products will be uncompetitive. Pinoy as we are, we will come up with something, innovation and creation will play a huge factor.

There are always 2 sides in a coin, depends which side are you favoring. I myself favor a strong peso (my apologies to the exporters and ofw), only because of the long term, it would mean more budget can go to infrastructure development, education, and more meaningful projects.

Hopefully one before I die, Philippines would be debt free. I am 30 something, I guess I may be dreaming.

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???

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.

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. :D