BSP to revise peso-dollar assumptions, other targets

As the peso continues to strengthen against the US dollar, the Bangko Sentral ng Pilipinas (BSP) said this weekend that it will revise next month its foreign exchange assumptions and other monetary targets. Monetary authorities would revise its current foreign exchange assumption of 45-47:$1 as the peso is nearing the 42:$1 level, BSP Gov. Amando Tetangco Jr. said. The peso closed on Friday at a two-year high of 43.30:$1, up by 6 percent in the year to date. President Benigno Aquino III is confident that it would stabilize at that level — not at 41:$1 as projected by Hongkong and Shanghai Banking Corp. The peso continues to gain against the greenback on strong foreign exchange flows into the Philippines as foreign capital in search returns better than what the US and European markets can offer finds its way into emerging markets like the Philippines. Tetangco said the BSP would also review other macroeconomic and monetary targets as the country registered stronger-than-expected economic growth at 7.9 percent in the first half of the year. The BSP would look into the projected growth in exports and imports as these two indicators continue to exceed growth expectations, the BSP chief pointed out. National Statistics Office (NSO) data showed that the country’s exports rose to $32.91 billion in January-to-August, up by 37 percent from the same period last year. From January to July, the country’s imports went up to $30.911 billion, up by 27 percent from the comparative period in 2009, the NSO noted. Strong capital flow The BSP would raise the projected levels of gross international reserves (GIR) and balance of payments’ surplus (BOP) for 2010 due to the strong flow of capital into the country, Tetangco said. “We will release the revised numbers [by] November," Tetangco said. As of end-September, the GIR expanded by 26 percent to $53.54 billion from the same month last year helped by government’s foreign exchange borrowings and higher earnings of the BSP. The central bank now believes that the GIR will likely expanded to a range of $54 billion and $55 billion this year. The payments surplus from January to September, on the other hand, already surpassed the revised target of P3.7 billion. Originally, the BSP expected the BOP surplus to settle at $3.2 billion this year. Tetangco had said the BSP is set to implement the fourth phase of reforms in its foreign exchange framework within the next two weeks, liberalizing existing restrictions on capital outflows to address the flow of capital into the Philippines. Monetary authorities are looking at raising the limit on foreign exchange that clients may buy from banks without documentation requirements. At present, the limit for non-commercial purposes is pegged at $30,000 and the limit for outward investments stands at $30 million per investor per year. — JE/VS, GMANews.TV