The Losing Power of the Pinoy Peso-- Again!

**jpdm** · December 5th, 2008 03:11 PM

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Business Mirror
December 5, 2008

[SIZE=4]Forex Better Stimulus: Experts[/SIZE]

Max V. de Leon

ECONOMISTS and exporters believe that pegging the exchange rate at about P55 to the dollar is a better economic stimulus, as its effects will be felt faster than the higher infrastructure spending the administration is espousing.

Aside from this, Prof. Benjamin Diokno of the University of the Philippines School of Economics said there is always the risk that the additional budget for economic pump-priming will just be wasted to corruption.

P100 billion added to spending power

This, he said, is why pegging the exchange rate to P55 is a better option.
In doing this, he said about P100 billion will be immediately added to the spending power of the families of overseas Filipino workers (OFWs), consequently stimulating the rural areas where most of them live.

The consumption-driven economy of the Philippines will glow once the families of OFWs have regained their strong spending power, he said.
This is unlike today when consumers are not spending, so the industrialists are also not investing.

This, Angeles said, will also [SIZE=4]provide competitive advantage to the locally manufactured products versus imported products because the cost of importation will naturally be higher.
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[SIZE=4][/SIZE]
“Such a move will increase our competitiveness in the export market, provide greater profit in pesos for our operations, [SIZE=3]prevent imports from eating into our share in the domestic market,increase business in our economy, generate employment, and increase the income of our people. It will not benefit the financial market operators but it will certainly benefit the real economy in the country[/SIZE] ,” Angeles said.

Diokno said the country can emulate Malaysia when it pegged its currency during the Asian financial crisis.

“The credibility of financial-market operators is down and their position weak. Believe it or not, the real and influential advocate of the strong currency rate are foreign financial-market operators, whose investments in pesos will be drastically reduced in value if the peso depreciates,” Angeles said.

**uls** · December 5th, 2008 03:36 PM

Recent dollar strength is temporary due to massive deleveraging worldwide

liquidation of assets causing huge demand for USD

investors now stay in cash or park cash in US treasuries

they are waiting for the deleveraging to end

when deleveraging ends,

Money will go back into equities, commodities

the dollar will drop

value of treasuries will drop

but that's months away pa

**kinyo** · December 5th, 2008 04:16 PM

there is always the risk that the additional budget for economic pump-priming will just be wasted to corruption.

it's not a risk ...

i'm sure Prof. Diokno really meant "certainty"

**jeDi13** · December 5th, 2008 05:44 PM

if graft and corruption in this country has been cut, Juan could have a less miserable life than what he has now. blame it on the dirty politicians hehe

**True Faith** · December 17th, 2008 12:19 AM

Trade lib failed in many aspects due to, first of all, [SIZE=4]an exchange-rate policy that kept the Philippine peso overvalued since 1946, resulting in too much consumption and imports[/SIZE]

from Business Mirror
December 16, 2008

Let the peso go to its realistic level ( as Prof Diokno mentioned 55 pesos to a dollar!

**uls** · December 17th, 2008 09:51 AM

malabo na ngayon yan

pahina ang dollar

**Monseratto** · December 17th, 2008 06:56 PM

Wow, the dollar is really slipping down. P46.90 na lang.

The Philippine peso rose as far as P46.92 per dollar, up 1.0 percent from Tuesday's close and hitting its highest since Oct. 2. It closed P46.90 per dollar on Wednesday.

The dollar dipped towards a 13-year low against the yen and hovered above 2-1/2-month troughs against the euro, a day after the Federal Reserve slashed its federal funds rate target to a range between zero and 0.25 percent.