THE FALLING PESO

We should know the effects of the falling peso against the dollar  and its impact on the economy of the country.

Though it is a knowledge that the falling rate will result to the higher prices of goods that will impact local cost, some sectors that earn income thru dollar currency will benefit from it due to it will give them more pesos in the exchange. But in opinion, such equation is not balance.

Since for example our OFWs will benefit from it, the major impact is the economy of the country itself that would suffer under the effects of higher dollar exchange. First of all our ability to repay loans or foreign debts will rise in every change or increase of the dollar, that aside from interest rates we pay for the foreign loans, the dollar adjustments will render our capability to repay foreign debts as doubly heavier  due to the effects of that exchange.

The hard question thus remains on how we can reduce the rising dollar in order to soften its effects in foreign debt service of the government because if such situation pervades, the administration will normally resort to raising taxes in order to meet its financial standing caused by depletion of its dollar reserves.

The only way to seek solution is to look into the condition of our export performances as it is the only source to combat and balance counter trade which causes the depletion of the dollar of the country and the only factor that will reduce the demands of foreign currency.  

Conversely, the effects of rising exports will mean more new products are made locally that would counter importation of the same products abroad. With more exports, the demand for new factories will mean new and more products will be made locally and therefore will reduce importations for same products abroad.

When there are more factories, there will be more employment that would eventually reduce poverty.

Such are just simple mathematics in understanding economy that would result to the strengthening of our local currency that would someday give better lives for every Filipinos.

Actually, our fight for strong peso is about export and import relationship which our country has been the loser ever since in trade and commerce with our counterparts abroad.

For the government, a weaker peso translates to higher debt servicing. The depreciation of the local currency increases the peso equivalent of foreign liabilities and the amount of pesos needed to buy the foreign exchange required to settle maturing obligations. This should have been money that the government could use to build more schools and roads or provide health services.