Philippine News: Peso appreciation worries Fil-Ams
07/25/2007 | 06:51 PM
LOS ANGELES – In this most populous city of California, Filipino Americans are asking: When will the peso calm down?
Last Monday, the peso closed at P44.810 after registering a high of P45.100 and a low of P44.810 at the daily foreign exchange market.
Last week, the peso closed at P45 but the statement attributed to Finance Secretary Margarito Teves saying he expected the peso to gain more momentum worried the Fil-Ams.
“Now, I have to send more dollars to my family back home for the same pesos they used to earn," one rued.
The rise in overseas Filipino workers’ remittances and the increase in foreign investments on the Philippine Stock Exchange were said to have immensely contributed to the strong peso.
Added to this was the meltdown in subprime real estate loans in the United States which weakened the U.S. dollar.
Teves said the peso should be allowed to seek its own rate. Analysts said Teves’ statement meant Bangko Sentral ng Pilipinas was not going to intervene farther with the peso-dollar rate.
The BSP, the Philippines’ central bank, earlier tried to defend the rate but it was costing BSPat least P21 billions to stay at the old level of P45-$1.
Teves said that “for as long as the macroeconomic fundamentals continue to improve, the peso will likely continue to improve."
Teves also said the government would not impose capital controls to cap the peso’s rise.
Defending the peso in the face of heavy dollar remittances and voluminous initial public offerings (IPOs) from listed companies proved futile.
Aside from the new IPOs and the follow-on issue of the Philippine National Bank, the Metropolitan Bank and Trust Co. also said it planned to issue P10 billion worth of unsecured unsubordinated debt shortly.
There is fear, however, that the peso could climb further to P44.60 as a result of more dollar inflows from abroad.
Last May, BSP said it bought over $2 billion in the spot currency market.
Adding fuel to speculations that the peso could further rise was the forecast of the Singapore-based DBS Bank that the peso could appreciate to P44.50 by the end of the year from the original estimate of P45.50.
According to the Singaporean bank, the Philippine peso could gather more momentum by 2008 to settle at P42.50.
The bank also expects the peso to hit P42.50 by the end of next year from its original forecast of P43 against the dollar.
In a statement, the DBS said it had upgraded its forecast in the next 18 months by 2.2 to 2.4 percent to reflect the improved sentiment.
“Despite worries about fiscal slippages in 2007, the Philippine peso continues to surprise on the upside, thanks to a positive balance of payments and capital inflows," DBS said in its statement.
From January to June, data from the Bangko Sentral ng Pilipinas (BSP) said the peso was averaging at P46 to the dollar.
Aside from the increased remittances coming from the OFWs, net foreign portfolio investments of $870 million last June entering the country provided the added strength of the peso.
Total net portfolio investments in the first semester hit $2.5 billion, three times higher than last year’s.
BSP Governor Amando M. Tetangco Jr. said the central bank registered a total gross inflow of $1.9 billion in June.
Tetangco said in a statement that 82 percent or close to $1.6 billion of June inflows went to PSE-listed shares.
The remaining 16 percent, according to Tetangco, was peso-denominated government securities such as fixed rate Treasury Notes.
Placements in peso time deposits made up the remaining $38 million or two percent of total gross inflows, according to BSP data. - Raul Valino, Philippine News
Last Monday, the peso closed at P44.810 after registering a high of P45.100 and a low of P44.810 at the daily foreign exchange market.
Last week, the peso closed at P45 but the statement attributed to Finance Secretary Margarito Teves saying he expected the peso to gain more momentum worried the Fil-Ams.
“Now, I have to send more dollars to my family back home for the same pesos they used to earn," one rued.
The rise in overseas Filipino workers’ remittances and the increase in foreign investments on the Philippine Stock Exchange were said to have immensely contributed to the strong peso.
Added to this was the meltdown in subprime real estate loans in the United States which weakened the U.S. dollar.
Teves said the peso should be allowed to seek its own rate. Analysts said Teves’ statement meant Bangko Sentral ng Pilipinas was not going to intervene farther with the peso-dollar rate.
The BSP, the Philippines’ central bank, earlier tried to defend the rate but it was costing BSPat least P21 billions to stay at the old level of P45-$1.
Teves said that “for as long as the macroeconomic fundamentals continue to improve, the peso will likely continue to improve."
Teves also said the government would not impose capital controls to cap the peso’s rise.
Defending the peso in the face of heavy dollar remittances and voluminous initial public offerings (IPOs) from listed companies proved futile.
Aside from the new IPOs and the follow-on issue of the Philippine National Bank, the Metropolitan Bank and Trust Co. also said it planned to issue P10 billion worth of unsecured unsubordinated debt shortly.
There is fear, however, that the peso could climb further to P44.60 as a result of more dollar inflows from abroad.
Last May, BSP said it bought over $2 billion in the spot currency market.
Adding fuel to speculations that the peso could further rise was the forecast of the Singapore-based DBS Bank that the peso could appreciate to P44.50 by the end of the year from the original estimate of P45.50.
According to the Singaporean bank, the Philippine peso could gather more momentum by 2008 to settle at P42.50.
The bank also expects the peso to hit P42.50 by the end of next year from its original forecast of P43 against the dollar.
In a statement, the DBS said it had upgraded its forecast in the next 18 months by 2.2 to 2.4 percent to reflect the improved sentiment.
“Despite worries about fiscal slippages in 2007, the Philippine peso continues to surprise on the upside, thanks to a positive balance of payments and capital inflows," DBS said in its statement.
From January to June, data from the Bangko Sentral ng Pilipinas (BSP) said the peso was averaging at P46 to the dollar.
Aside from the increased remittances coming from the OFWs, net foreign portfolio investments of $870 million last June entering the country provided the added strength of the peso.
Total net portfolio investments in the first semester hit $2.5 billion, three times higher than last year’s.
BSP Governor Amando M. Tetangco Jr. said the central bank registered a total gross inflow of $1.9 billion in June.
Tetangco said in a statement that 82 percent or close to $1.6 billion of June inflows went to PSE-listed shares.
The remaining 16 percent, according to Tetangco, was peso-denominated government securities such as fixed rate Treasury Notes.
Placements in peso time deposits made up the remaining $38 million or two percent of total gross inflows, according to BSP data. - Raul Valino, Philippine News
