HSBC: Peso-dollar rate to favor RP currency at 41:$1

Strong foreign exchange inflows to the Philippines and the general weakness of the US dollar in the world market will push the peso-dollar exchange rate toward 41:1$ by the end of the year, British-owned Hongkong and Shanghai Banking Corporation (HSBC) said Tuesday. Two HSBC senior officials told reporters in a group interview that the peso should gain more strength in the coming months “From the fundamental point of view, the Philippine peso should still appreciate," according to Junie Veloso, HSBC senior vice president and head of corporate banking. The bank had expected the peso to average at 43.50:$1 this year as funds from developed economies flow into East Asia benefiting emerging economies, he said. HSBC has abandoned that forecast, according to its officials. The Philippines should benefit from the recent shift in the flow of funds that used to favor first-tier countries in the region like Singapore, China, and Japan but are now shifting to second-tier markets like the Philippines, Veloso said. “There has been a shift in recent months and the Philippines will benefit from it," Veloso said. Most of the foreign funds are being invested in the Philippine equities and fixed-income markets. “This is a reflection of foreign-investor view of the Philippines in particular and Asia in general and their continued bearishness [toward] the euro area and the United States," Veloso said. The peso-dollar rate averaged 46.028:$1 in January, but the Philippine currency had since gained 5.3 percent to 43.55:$1 on average. Jose Arnulfo “Wick" Veloso, HSBC treasury chief, said the earlier forecast was adjusted to 43:$1. But the inflow of foreign funds prompted the bank again recast its currency outlook to 41:$1. — VS, GMANews.TV