OFW earnings, weak dollar push peso to close at 42-level

The Philippine peso closed within the 42 to a US dollar level for the first time in more than seven years and four months on Friday, as the local currency was buoyed by strong inflows of remittances from overseas Filipino workers. The peso ended at P42.795 against the greenback, its highest level since June 20, 2000 when it closed at P42.675 against the dollar. Analysts said the peso's strength was also due to the US dollar's inherent weakness. The peso opened at its intra-day low of P43.19 against the dollar, before touching a high of P42.670. Volume traded reached $759.50 million. Banco de Oro chief market strategist Jonathan Ravelas said the continued inflow of remittances from overseas Filipinos, and the dollar’s weakness, drove the peso to reach the 42 to a dollar level. The fourth quarter of the year is historically the period when most of OFW remittances pour into the country. Meanwhile, the US dollar fell further against other currencies after US Federal Reserve chairman Ben Bernanke said their economy will slow down in the following months due to the US housing industry slump and high oil prices. “Remittances and the general weakness of the dollar against other currencies were the main reason for the peso’s appreciation," Ravelas said. "The local currency rose 2.01 percent week-on-week to 42.795 as the greenback weakened against major currencies on expectations that the US Fed will further cut its benchmark rates to prevent an economic slowdown," he added. OFWs have complained that the stronger peso has effectively decreased the value of their earnings. However, Ravelas said the strong peso is currently "doing more good than harm" to the economy in light of the higher world oil prices. Ravelas said today's closing rate signals that the peso could rise even further towards the 41.70 – 42.00 levels in the coming week. Stocks rebound Philippine shares also rebounded Friday as investors snapped up bargain stocks on expectation the central bank will cut interest rates next week. The Philippine Stock Exchange Index advanced 11.56 points, or 0.3 percent, at 3,703.66, after plunging 2.54 percent Thursday. ''Hopes of a rate cut next week inspired some buying. However, volume was thin ahead of the weekend, suggesting that investors aren't too keen on taking aggressive positions,'' said Accord Capital Equities analyst Lawrence de Leon. Mining issues led the advance on higher metal prices. Philex Mining Corp. surged 7.1 percent at P11.25 after reporting a 50 percent rise in its third-quarter net profit from a year ago on higher metal prices and increased sales volume. Another gold producer, Lepanto Consolidated Mining Co., jumped 21.2 percent at P0.40, after signing a preliminary agreement with Zijin Mining Group Co., China's biggest gold miner, to sell a 20 percent stake in a Philippine project for $70 million (euro48 million). Philippine Long Distance Telephone Co. inched up 0.3 percent at P2,995. Ayala Land Inc. rose 1.6 percent at P16 ahead of third-quarter earnings report Nov. 13. Decliners outnumbered gainers 48 to 47, while 62 stocks were unchanged. - GMANews.TV with an AP report