The current administration is expecting for an increase of currency value of the dollar from $1=P49 to $1=P55. I doubt that this will stop at P55, but, will possibly increase to P60-P70 against $1. What will be the apparent effects of these increases if they're not properly addressed?
Positive Effects:
1. A lot of exporters will benefit from the increased value of the peso. Exports such as banana, pineapple, handicrafts, etc.
2. The OFWs will benefit from the increase, since, dollar remitted will gain more peso.
Negative Effects:
1. Increase of the prices of imported goods, like Samsung, Apple, etc. You will notice the increase of prices in online stores & malls.
2. Increase of the payment of foreign loans due to the devalued peso. This will put a heavy burden on Peso when it comes to foregin exchanges.
3. Due to the weakening of the peso, prices will go up (food, clothing, petroleum, etc.). Why is this? Although, most basic commodities are produced locally, however, we are heavily dependent on imported material inputs, such as fertilizers, chemicals, fuel, etc. which, in turn, affect the prices of the produce or finished products.
4. When the Peso continually weakens, prices of goods will consequently go up and the labor sector will demand for a wage hike, which, in effect, increases the inflation.
5. When prices go up, a lot of impoverished Filipinos could hardly buy food and eat three times a day. Remember out of our 110 million population, only 43 million have jobs and the rest are dependent. Of the 43 million working population, not all are working with a regular status, some are contractual and some are paid by results.
6. Banks will also charge higher interest rates on loans and credits to cover for the losses due to the conversion rates.
7. The weakening value of peso is an indicator that a lot of investors and businessmen are converting their peso to dollars, and some are pulling their investments away from the country. This means that they have lost their confidence in the Philippine market.
A lot of people are saying that the devaluation of peso does not matter at all. They say that Japan Yen has a little value in currency than us and yet, they're still a very progressive country. Well, my answer is that we cannot compare our country to Japan, since, they have a very stable economy and does not depend highly on imports. They export more than import.
On the other hand, our country has a floating economy and usually rely on imports mostly from China. Even a big percentage of rice supply is imported from Vietnam. Our trading system is not properly balance, since, we import more than we export. Hence, when there are light changes in the financial market, this could create a big impact over-all.
Although, the Peso is expected to strengthen this November and December due to the OFW remittances, but, this is just only temporary. The relentless effect will be felt next year.
What do you think? Are we ready for a survival mode again?
Positive Effects:
1. A lot of exporters will benefit from the increased value of the peso. Exports such as banana, pineapple, handicrafts, etc.
2. The OFWs will benefit from the increase, since, dollar remitted will gain more peso.
Negative Effects:
1. Increase of the prices of imported goods, like Samsung, Apple, etc. You will notice the increase of prices in online stores & malls.
2. Increase of the payment of foreign loans due to the devalued peso. This will put a heavy burden on Peso when it comes to foregin exchanges.
3. Due to the weakening of the peso, prices will go up (food, clothing, petroleum, etc.). Why is this? Although, most basic commodities are produced locally, however, we are heavily dependent on imported material inputs, such as fertilizers, chemicals, fuel, etc. which, in turn, affect the prices of the produce or finished products.
4. When the Peso continually weakens, prices of goods will consequently go up and the labor sector will demand for a wage hike, which, in effect, increases the inflation.
5. When prices go up, a lot of impoverished Filipinos could hardly buy food and eat three times a day. Remember out of our 110 million population, only 43 million have jobs and the rest are dependent. Of the 43 million working population, not all are working with a regular status, some are contractual and some are paid by results.
6. Banks will also charge higher interest rates on loans and credits to cover for the losses due to the conversion rates.
7. The weakening value of peso is an indicator that a lot of investors and businessmen are converting their peso to dollars, and some are pulling their investments away from the country. This means that they have lost their confidence in the Philippine market.
A lot of people are saying that the devaluation of peso does not matter at all. They say that Japan Yen has a little value in currency than us and yet, they're still a very progressive country. Well, my answer is that we cannot compare our country to Japan, since, they have a very stable economy and does not depend highly on imports. They export more than import.
On the other hand, our country has a floating economy and usually rely on imports mostly from China. Even a big percentage of rice supply is imported from Vietnam. Our trading system is not properly balance, since, we import more than we export. Hence, when there are light changes in the financial market, this could create a big impact over-all.
Although, the Peso is expected to strengthen this November and December due to the OFW remittances, but, this is just only temporary. The relentless effect will be felt next year.
What do you think? Are we ready for a survival mode again?
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