Workers raise alarm over peso fall
Labor groups have voiced alarm over the drop of the peso against the US dollar to its lowest level in 12 years, but some business groups are not worried.
The peso closed at P53.27 to a dollar on Thursday, a further deterioration from the P53.23 the day before and a big drop from Monday’s P52.95.
At P53.27, the currency is higher than the government exchange rate assumption of P50 to P53 for 2018.
“It’s no cause for concern,” said George Barcelon, chair of the Philippine Chamber of Commerce and Industry. Barcelon noted that other currencies in the region have weakened against the US dollar as well.
“As long as it works within a range that’s manageable, [it’s OK]. What’s difficult is the sudden increase and decrease,” he added.
The peso has depreciated against the greenback in the wake of the decision of the Federal Reserve, the US central bank, to raise US interest rates for the second time this year.
The US central bank indicated that two additional increases were expected this year.
Philippine Exporters Confederation Inc. (Philexport) said a gradual peso depreciation would benefit overseas Filipino workers (OFWs) and exporters.
Philexport president Sergio Ortiz-Luis Jr. noted that unlike before more people were now depending on the dollar, referring to families of OFWs in the country.
“With the [weaker] peso, exporters can somehow compete against imported products,” Ortiz-Luis added.
While the peso slide has a short-term benefit for OFWs and their families, factories that import raw materials will suffer the brunt of a weaker peso, said Julius Cainglet of Federation of Free Workers.
Importing goods becomes more expensive as it will require more pesos to buy the same amount of goods.
“This of course compounds the already rising oil prices as a result of the Tax Reform for Acceleration and Inclusion (TRAIN) Act. This will eventually add to the already rising inflation. It becomes all the more urgent to raise wages across the board,” Cainglet said.
The TRAIN Act has imposed starting Jan. 1 excise on a number of goods like fuel, sugar-sweetened drinks and vehicles to compensate for a rise in the cap on annual income exempt from income tax.
For the Associated Labor Unions-Trade Union Congress of the Philippines (ALU-TUCP), a depreciating peso is a grave concern, particularly for workers who will bear soaring prices of basic commodities and services.
Real value of wages
“[T]his is bad timing because the real value of wages will erode further, especially that classes have just started and there are so many expenses in the face of inflation caused by the TRAIN law and profiteering,” said ALU-TUCP spokesperson Alan Tanjusay.
The finance department has said the TRAIN Act accounts for only 0.4 percentage point of the inflation rate, which rose in May to 4.6 percent, the highest in more than five years. Passing a bill seeking a daily minimum wage of P750 nationwide and repealing the TRAIN Act become “more imperative,” a party-list lawmaker said.
In a statement, Bayan Muna Rep. Carlos Isagani Zarate said the weak peso would lead to capital flight, especially portfolio investments. —WITH A REPORT FROM JEROME ANING
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