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THE peso
remains fundamentally strong and should average within
target range of between P42 to P45 per dollar this year,
the Bangko Sentral ng Pilipinas (BSP) said Monday.
That the
currency has retreated past P44 per dollar is temporary
and the balance of payments—projected to post a surplus
this year, should regain strength at some point, BSP
Governor Amando Tetangco Jr. told reporters.
Analysts
and bank treasury officials have been saying the peso
will likely recover during the fourth quarter of the
year.
“I
agree,” Tetangco said.
His
optimism stems from the forecast that the country’s
balance of payments (BOP) would likely register a
surplus of $3.4 billion this year.
“The
peso has fundamental support from the BOP although it is
also being affected by ongoing risk aversion affecting
emerging markets like us,” Tetangco said.
The peso
dropped more than six centavos on Friday to P44.135 per
dollar.
The BOP
is the country’s foreign exchange position after foreign
currency denominated liabilities have been deducted.
There
has been a flight of foreign funds from emerging markets
to safer havens in recent months as record prices of
commodities, particularly crude oil, has affected the
price of goods and services, prompting central banks to
discourage excess money into their respective economies
by raising interest rates. The situation is also
expected to impact on corporate earnings.
On net
basis, $189.9 million in portfolio money, also known as
“hot money,” exited in the first five months of the
year, compared with $1.587 billion in net inflows a year
earlier.
Despite
his disappointment, Tetangco took comfort in the
remittances from abroad, saying “we got billions in
return from our overseas Filipino workers.”
Some
$1.4 billion in remittances came in last March, bringing
the year-to-date total 13.2 percent higher to $4
billion, he reported.
“This is
sentiment-driven,” Tetangco said of the peso that on
average moved at P43.744 per dollar in the week ending
June 5, from P42.902 in May.
Last
September the local currency traded on average at
P46.131 per dollar and gained against the
US
unit until April when it traded at P41.82 per dollar.
Last
month the peso lost more than P1 on average at P42.902.
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