October 15, 2009 – Thursday
This morning we signed the contract for the construction project having negotiated a substantial reduction in the previous bid price to compensate us in part for the appreciation of the peso against the UK Pound. The alternative was we deferred starting construction until possibly even 2011 and extended the lease on our rented house. The compromise pegs the peso price nearer what we originally budgeted when the UK pound stood at 80 pesos, although any decline from now on is still our risk. With the US Dollar down to 46.2 pesos, businesses here that depend on foreign customers will face tough times and will need to be flexible on their margins if they want to maintain their order book.
The Philippines president has appealed to the rich nations of the world to provide the financial help essential for the rehabilitation of the country after two major catastropies. The published figures of the funds needed are massive and yet they apparently only cover public assets, not private homes and family losses. The reported increased remittances from OFWs without doubt help but together with a weak US dollar, they have tended to underpin a higher value peso than is perhaps ideal when asking other countries for financial help. Despite having substantial dollar reserves this country simply does not have the means to repair all the damage from its own resources so I hope that the recent push to seek fulfilment of promises of aid will prove successful.
The irony in all this is that those rich nations are also those under greatest financial pressure at present, hence the weakness of those currencies against the Philippines peso. Let us hope that the many friends of this country overseas will understand the urgent need to assist.