Peso to hit 37.2:$ in 2008 as remittances pour in - HSBC
01/24/2008 | 05:45 PM
Investment lender HSBC said Thursday it expects the Philippine peso to surge to as high as P37.2 against the US dollar this year, due to strong foreign exchange inflows from overseas Filipinos and investments.However HSBC said, the strong local currency will accompany a slowdown in the country's economic expansion. The lender said the Philippines' gross domestic product will only grow 5.9 percent in 2008, after expanding more than 7 percent in the first three quarters of 2007.
HSBC said average inflation for the year will be 4.1 percent.
"We are quite bullish about foreign investments this year particularly in the services sector such as business process outsourcing and tourism development," Frederic Neumann, HSBC economist, said.
Neumann said the peso is likely to see more upside this year as the economy still has room for a stronger local currency. In face of surging foreign exchange inflows following drastic cuts in US interest rates, Neumann said the Bangko Sentral ng Pilipinas will likely tolerate further appreciation of the peso.
The US Federal Reserve's 75 basis-point rate cut, and successive cuts across the globe resulting from that move, is expected to release even more liquidity into the financial market and Neumann said these funds would go straight into Asia.
"We are looking at a process where foreign exchange would flood into Asia because of lowering interest rates in the US," Neumann said.
Neumann said the inflow of remittances from overseas Filipino workers would also be sustained this year and this would support an even stronger peso.
"That would put the pressure on the peso and we believe that the central bank would take a very pragmatic view," Neumann said.
However, Neumann said that an appreciation of the local currency to P36:$1 or even higher to P35:$1 would be a burden to the economy.
But Neumann said the peso's strength is more if a political issue than an economic one, seeing that overseas Filipinos, the main contributors to the local economy's growth, are the hardest hit by a stronger local currency. - GMANews.TV
READER'S FEEDBACK:
From: Han in Tel Aviv, Israel
Sent: Friday, January 25, 2008 12:26 AM
Wow! Congratulations, tumataas ang piso pero according to what we know back home still the prices are still high. Yeah they will increase the price of gasoline and then later withdraw. There is no really rolling back of prices. Yeah it takes time to see the effect of the economy that is growing but still how many years do we have to wait?
We're so freaking tired of being a caregiver or maid or being a servant to other foreigner.
How long will the government to do something? They are just waiting for the dollars to flood in. Do something. Don't just sit in your comfortable zone. Do something because we're so sick of being away from home.
From: Jojit Sese (dlsese@yahoo.com) in Georgetown, Cayman Islands
Sent: Friday, January 25, 2008 2:08 AM
As an OFW, I really felt bad when I read your article on "Peso to hit 37.2:$ in 2008 as remittances pour in - HSBC".
However, as I go on reading it including the reasons, I am kinda relieved. However, in a perspective of an ordinary Filipino, how would he react to it?
Although, I do understand that a stronger peso relates better for our economy only but did we realize what kind of economy are we talking about. Are the prices of commodity affected? They are indeed affected but prices is going up but not down. Is this the economic benefit we talked about?
Yes, I know that we don't have control in the world oil prices but how would an ordinary Pinoy feel the improvement in the economy to his life? Again, is this the economy we are talking about that?
Industries definitely are still recuperating from the Asian financial crisis in the 1990's would surely reap the benefit.
However, how would the private employees of the industrial sector get the benefit from a stronger peso?
Somebody might forget that these employees helped their employers tighten their belt during those crisis through cost reduction measures. Is this the economy we are
talking about?
Neumann message should be read by all government institution so that the benefit of a strong peso be felt by an ordinary Pinoy.
Would the ordinary Pinoy afford his medicine? Can he buy a cheaper and good quality NFA rice? Can he afford to visit his relatives in far places because the bus fares were affordable? Can he be receiving a smile from a government employee when he inquires or ask for their services? Can the employers feel a better security of their business? Can schoolchildren take class inside a standard room and not under the tree?
So much to say on the effect of a stronger peso, so muck to be done but I hope and pray that everyone should avoid pointing each other who would do this for the ordinary Pinoy before it will only become a waste.
God bless our beloved country! Mabuhay!
Sent: Friday, January 25, 2008 12:26 AM
Wow! Congratulations, tumataas ang piso pero according to what we know back home still the prices are still high. Yeah they will increase the price of gasoline and then later withdraw. There is no really rolling back of prices. Yeah it takes time to see the effect of the economy that is growing but still how many years do we have to wait?
We're so freaking tired of being a caregiver or maid or being a servant to other foreigner.
How long will the government to do something? They are just waiting for the dollars to flood in. Do something. Don't just sit in your comfortable zone. Do something because we're so sick of being away from home.
From: Jojit Sese (dlsese@yahoo.com) in Georgetown, Cayman Islands
Sent: Friday, January 25, 2008 2:08 AM
As an OFW, I really felt bad when I read your article on "Peso to hit 37.2:$ in 2008 as remittances pour in - HSBC".
However, as I go on reading it including the reasons, I am kinda relieved. However, in a perspective of an ordinary Filipino, how would he react to it?
Although, I do understand that a stronger peso relates better for our economy only but did we realize what kind of economy are we talking about. Are the prices of commodity affected? They are indeed affected but prices is going up but not down. Is this the economic benefit we talked about?
Yes, I know that we don't have control in the world oil prices but how would an ordinary Pinoy feel the improvement in the economy to his life? Again, is this the economy we are talking about that?
Industries definitely are still recuperating from the Asian financial crisis in the 1990's would surely reap the benefit.
However, how would the private employees of the industrial sector get the benefit from a stronger peso?
Somebody might forget that these employees helped their employers tighten their belt during those crisis through cost reduction measures. Is this the economy we are
talking about?
Neumann message should be read by all government institution so that the benefit of a strong peso be felt by an ordinary Pinoy.
Would the ordinary Pinoy afford his medicine? Can he buy a cheaper and good quality NFA rice? Can he afford to visit his relatives in far places because the bus fares were affordable? Can he be receiving a smile from a government employee when he inquires or ask for their services? Can the employers feel a better security of their business? Can schoolchildren take class inside a standard room and not under the tree?
So much to say on the effect of a stronger peso, so muck to be done but I hope and pray that everyone should avoid pointing each other who would do this for the ordinary Pinoy before it will only become a waste.
God bless our beloved country! Mabuhay!
