Indigenous exports to benefit from weak peso – PhilExport

Indigenous exports or non-electronics are expected to benefit from the peso devaluation because it has lesser imported raw materials, according to exporters’ group.

Sergio Ortiz-Luis, Jr., president of the Philippine Exporters Confederation (PhilExport), explained that indigenous exports do not have much imported components so they will gain more from this currency war.

“This means they have little need for dollars to pay for imported raw materials,” he said. Indigenous exports include furniture, handicrafts and local agricultural produce. The import dependent exports are electronics and garments.

The peso devaluation has retained the competitiveness of the country’s exports but not really to boost it because the local currency has depreciated along with the other currencies in the region, according to exporters’ group.

that had the Bangko Sentral ng Pilipinas refused to allow market forces the Philippine exporters will be at the losing end.

“But since our devaluation is just tracking our competitors we have retained our competitiveness. So, we are good,” he said.

But Ortiz-Luis has doused a notion that the country’s exports will grow higher because of the peso devaluation.

“Our exports position will still be the same. If our exports will grow higher it is not because of this reason,” he pointed out. The government and exporters have already conceded that the 10 percent exports growth target this year cannot be achieved anymore.

Exporters though will benefit because they will get additional peso for every dollar.

Exporters, however, are closely watching on interest rates because monetary authorities are expected to tighten rates to counter the peso fall. Ortiz-Luis said that any increase in interest rates should not reach 10 percent from the prevailing 6 to 8 percent.