CEBU CITY — Economists may perceive currency strength as an indication of economic stability, but nonetheless, Cebu exporters are lamenting the peso’s strength against the US dollar since this impacts negatively on their export competitiveness.

As such, the Confederation of Philippine Exporters in Cebu (Philexport-Cebu) will submit this week a position paper to the Office of the President and other key government agencies on the sudden appreciation of the Philippine peso vis-à-vis the US dollar and the Euro.

“The exporters are very worried,” said PhilExport-Cebu Executive Director, Fred Escalona.

The peso peaked at an intra-day high of P44.60 last April 7 and a 20-month high of P44.77 against the dollar.

The draft of PhilExport-Cebu's position paper pointed out that “the peso's strength breached the psychological level of P45 already the day before.”

It went on to say that“our surviving exporters are still trying to cope with the effects of the global recession while there are still no clear signs of a sustainable market recovery. The additional pressure brought to bear on the industry by the appreciating peso could put more exporters out of business. It is time for Government to act decisively; hence we humbly appeal for Government’s firm support again.”

It further read that while the prevailing exchange rate situation is good news for importers and to those who service the country’s foreign debt, the unchecked appreciation of the peso however, is bad news for the already-challenged export sector as it further exacerbates the stakeholders in competing with its neighbors who have consistently been adhering to rigid currency control mechanisms.

Not even the negative inflation report of 4.4 percent in March and the announced Bangko Sentral ng Pilipinas (BSP) interventions could dampen the market’s interest in the local currency, the draft position paper emphasized.

“While government sees the recent developments on the peso positively, the export industry, which is one of the two major economic drivers, continues to struggle further. The export industry contributed roughly US$50 billion in export earnings to the economy in 2008 before it suffered a 21.7 percent drop to US$38.3 billion in 2009 due to the global recession,” Philexport-Cebu's statement said.

With the sudden surge of an already firm peso, the exporters face another crucial challenge as their dollar earnings are being eroded progressively.

Likewise, exporters fear that this development could lead to further closures and business stoppages as profit margins continue to shrink.

The Cebuano exporters also underscored that without the incentive to invest in capacity building and for product marketing and promotion, the ranks of the unemployed will continue to swell, with the bulk coming from the exporting sector that includes regular workers as well as workers in the exporters’ supply and value chains.

The draft position paper was signed by Presidents of the different export sector organizations here, such as the Cebu Furniture Industry Foundation (CFIF); the Gifts, Toys and Housewares Exports Association (GTH-Cebu); Fashion Accessories Manufacturers and Exporters (FAME-Cebu); Mactan Export Zone Exporters and Manufacturers (MepzCem); Seaweed Association of the Philippines (SIAP); Association of Food Industry Manufacturers and Exporters (AFIME), and the Industrial Goods Sector Association.