A Filipino-American investment banker and equity capitalist concluded in a recent paper that "despite what government officials say, OFWs and those who depend on them are the big losers" in the movement of the Philippine peso rate in relation to the US dollar.
Raymond F. Barrios, author of the paper, is a Filipino-American dual citizen currently attending the Harvard Business School. His paper expresses surprise that the BSP commissioned a study to invalidate the general impression that rapid change in the exchange rate has hurt many Filipinos. The BSP's role is to promote economic stability, not condition the mind of the people, Barrios remarks.
He quotes BSP Deputy Governor Diwa Gunigundo as saying that problems with a strong peso ?is perception?we need to educate people. Some of them feel they're not getting the positive impact of a firm peso." Barrios retorts that such a statement from a government official is deeply troubling, where government appears to be ignoring both its citizens' concerns and common sense.
The paper refers to the Mexican experience in the early 1990s, noting: "the BSP's trumpeting of the positives of a 'firm' Philippine peso is reminiscent of the Mexican authorities' simple and ignorant view that a strong peso is a good thing." A separate HBS case study revealed that shortly before the Mexican peso crisis in 1994 that the Mexican "peso's exchange rate against the dollar demonstrated remarkable stability, evidence in the authorities' eyes of the success of reform and foreign confidence."
But Barrios?s paper adds: "the BSP's claim that US-sourced remittances are overstated is irrelevant. All the
currencies?(analyzed) have moved in the same general direction?In other words, the values of these remittances increased in peso terms regardless of where they came from. This relationship still applies with today's strong peso." The paper notes that the Bangko Sentral ng Filipinas' "attempt to sugarcoat the peso's strength is not credible."
Who then are the "winners" and "losers" in the peso?s rise? "Those who are short on the US dollar and long on the Philippine peso are the winners? and vice-versa, says Barrios, adding, ?The big winners are a small number of beneficiaries: the government, the ruling elite, oil companies, utilities and importers (including smugglers). A strong peso also rewards jetsetters and those with insatiable taste for imported goods."
The paper concludes that "the strong peso has swayed more Filipinos to stay home instead of looking for higher payer jobs overseas. Remittances, correspondingly, will likely decrease as well. The Philippines must position itself to transition the economy."
Raymond Barrios is also a convener of Global Filipino Nation, an unincorporated association of leading organizations and leaders onshore and offshore, including those in academe, think tanks, peasant groups, labor, media, grassroots organizers, business, banking and investments, consulting, OFW/migrant rights advocacy, youth, indigenous peoples, foundations and law.
His paper cites the position of the Global Filipino Coalition.
Here?s the whole paper.
-Global Filipino Nation Secretariat