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BSP sees peso recovery starting April |
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(19 February 2004, Thursday - Philippine Daily Inquirer)
By Doris C. Dumlao THE BANGKO Sentral ng Pilipinas (the Philippine central bank or BSP) does not expect any further peso freefall over the next two to three months despite increasing political tension ahead of the May presidential elections. While keeping enough options to tame currency speculation, BSP Governor Rafael Buenaventura told reporters Tuesday night there should be no reason for the peso-dollar exchange rate to deteriorate because the country's economic fundamentals were "not bad." "What we are saying is that it will not go up to the level that they are talking about. At the same time, it is also not realistic to expect a dramatic improvement in the exchange rate in the next two to three months so it will be range-bound," Buenaventura said at the sidelines of the launching of HSBC's 2004 guide to cash and treasury management in the Asia-Pacific. Swiss bank UBS, for instance, has forecast that the local currency would depreciate to 57.50 to the dollar within three months. Some even expect a freefall to 58 to $1. On Wednesday, the peso ended at 56.125 from Tuesday's closing of 56.02 against the greenback. The currency's lowest close so far was recorded at 56.20 two weeks ago while the historic intra-day low was at 56.22 to a dollar. "There should be some improvement come April or May as export proceeds begin to come in," he said. The BSP chief said the peso's depreciation to all-time lows was not driven by fundamentals. "A lot of these is really self-inflicted, because we are driving ourselves crazy, worrying ourselves to death. Unfortunately also, we are not getting the inflows that other countries are getting," he explained. But Buenaventura said the BSP, at the very least, has not seen high speculative activities over the last few trading days. "It was more of people holding back, the leaps and lags, (like) exporters holding back in the hope that it (dollar) would be higher and remitters also holding back in the hope it would be higher," he said. On the other hand, he said pressures were also coming from importers who panicked and thus resorted to hedging mechanisms. "Plus of course (there is) the fact that in January and February there had been weak inflows and large ouflows," he noted. The BSP chief reiterated what he said a week ago that the central monetary institution had enough options to curb speculation against the peso. However, he said he would not telegraph the BSP's moves to the market. "We just said we will keep our options open," he said. home | latest news |
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