CEBU CITY, Philippines - Local business organizations are apprehensive over the recent decision of the United States Federal Reserves perk the US economy with a $600-billion stimulus, for fears that this may result to sharp volatility in the peso. A representative of one such organization is the President of the Mandaue Chamber of Commerce and Industry, Eric Mendoza, who is also a furniture exporter. In a recent interview with local media, an apparently worried Mendoza pointed out that, ''that move by the US Federal Reserve could further increase capital flows or 'hot money' to emerging markets which include the Philippine stock market. The effect would be an even more rapid rise of our local currency.'' According to data from the Philippine Stock Exchange, the Philippine peso, which was at P46.43 against the dollar at the start of the year, appreciated to P42.64 Friday last week. Mendoza noted that the rapid appreciation of the peso versus the greenback may cause adverse impacts on the Philippine economy, particularly where this concerns the competitiveness of such particular industries as exports, business process outsourcing, and tourism. ''It may sound like a positive report that the peso is getting stronger, but in reality it will not be good for the economy because our economy is export-driven Our government must at least manage the volatility of the peso,'' he told reporters in an interview. Mendoza likewise urged the country's monetary department to act decisively before the local currency further hurt exporters' competitiveness and affect the value of remittances sent home by Filipinos abroad.
''The rapid rise (of the peso) does not necessarily indicate a stronger economy,'' the Cebu business leader stressed. ''If anything, it is only because the US Federal Reserve is putting a hefty liquid amount of dollars into the US economic mainstream. The peso has strengthened by over eight percent this year, making the country's exports less competitive and affecting the value of dollar remittances by overseas Filipino workers (OFWs).'' Mendoza fears that if this scenario continues, many companies, including manufacturing and BPOs, may have no choice but to downsize their operations.
