Dollar’s slump brings problems for exporters

Companies in the export sector are finding themselves struggling to turn a profit as the dollar drops in value against the sol, but are fighting back with new technologies and more efficient production processes, according to exporters’ association ADEX.

ADEX Chairman José Luis Silva stated that small exporters are being hit hardest by the exchange rate drop, particularly in sectors such as jewelry that are labor-intensive – and so whose costs in soles are rising as income in dollars drops.

Last week Andean Growth Corporation President Enrique García stated that the exchange rate is just one element affecting the competitiveness of Peruvian exports, as other factors such as productivity and improved working conditions involve a joint effort from the Government, the private sector and workers.

“The exchange rate is an important element, as its variation directly affects exporters’ income levels, but we must consider other factors such as transport and customs fees when we talk about competitiveness,” he told the Andina agency.

He added that the Central Reserve Bank (BCRP) is working hard to avoid inflation, but there is a need for foreign currency in the country.

All the same, he disagreed with the idea that exporters are becoming less competitive, as the BCRP takes inflation and price increases into account when measuring the performance of the exchange rate, rather than looking at indicators of business costs.

“The basis of the BCRP’s measurement of price increases is to look at whether a housewife in Argentina or Colombia has gained or lost compared to her Peruvian counterpart,” he said.

He claimed that this indicator is falling out of favor around the world, as it is not accurate.

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