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BSP officials see peso hovering around 52:$1 |
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By Des Ferriols
The Philippine Star 02/06/2006 The market is expecting the peso to continue breaching the 51 to a dollar mark but Bangko Sentral ng Pilipinas officials said the exchange rate was more likely to trade around the P52 to $1 level as corporate demand start to pick up to balance dollar inflow from abroad. Sustained market optimism pushed the peso further up on Friday, sending the exchange rate above the P52 to $1 mark for the first time in 2002 to close at 51.91 to the dollar. The peso last touched this level in Sept. 11, 2002 when the market closed at P51.90 to the dollar although at the time, the exchange rate was heading towards further depreciation instead of going up. BSP officials... From B-1 The 51to $1 breach has been expected since mid-January especially after the exchange rate hovered at around 52.09 last weak as news broke out the government has made good its plan to raise the value added tax from 10 percent to 12 percent. Almost at the same time, the California Public Employees Retirement System (CALpers) announced that its analysts had given the Philippines an improved rating compared to last year, placing it firmly in the fund’s list of permissible investment destinations. Although the market is expected to continue having more reasons for optimism, BSP Governor Amando M. Tetangco Jr. said the BSP was also expecting a pick-up in dollar demand in the coming weeks. "We expect further improvement in dollar inflows so that will provide additional support to the peso but there will also be demand," Tetangco said. "It will probably stay around this level, maybe a little over P52to $1 in the days to come." Tetangco also pointed out the movement of the peso was tracking the general trend in the region where major currencies have also been appreciating against the dollar. As the peso appreciated by 2.3 percent, Tetangco said the Thai baht also appreciated by 3.9 percent and the Indonesian rupiah by 5.7 percent. The Singapore dollar was also on its way up against the dollar by around 2.5 percent. "So if you look at other currencies in the region, they are moving in the same direction," he said. "If anything, the peso has the lowest volatility rate among its peers." According to Tetangco, the peso’s volatility rate has averaged at less than half of a percent compared to the baht which had a volatility rate of 1.37 percent and the rupiah at 1.26 percent. Exporters have been pressing the BSP to act on the continuous appreciation of the peso but Tetangco said there was little for the central bank to do especially since the volatility rate has been remarkably low. "Our job is to smoothen the movement of the peso, whether up or down," Tetangco said. "But we haven’t seen the need to do that because so far, the movement has been smooth already." Traders have been predicting the peso to strengthen further to as high as 51.88 to the dollar in the next few months and if this mark is breached, the peso would reach its highest level in three years. Tetangco on the other hand observed that there has been a "good two-way liquidity" in the market. He said dollar demand from manufacturing, oil and other dollar users was covered adequately by inflows from overseas Filipino workers as well as portfolio investments. "Overall sentiments continue to be positive," Tetangco said. |
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