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AS THE
Philippine peso strengthened against the dollar for a
fifth day after foreign investors bought the nation’s
stocks, gaining to as much as P41.865 at one point,
President Gloria Macapagal-Arroyo tried to soothe the
fears of Filipinos in London, assuring them measures
were being done to blunt the impact of the rising peso
on the value of their remittances.
Foreign
funds Thursday bought P167 million more Philippine
stocks than they sold, the first net purchase this week.
The peso has gained 17 percent against the dollar since
the start of the year, the best-performing Asian
currency, as the Philippine benchmark stock index
climbed 25 percent.
“Concerns over emerging markets are easing and some
funds are probably reinstating positions in the
Philippines,”
said Lito Biacora, vice president for treasury at Bank
of the Philippine Islands. “Together with remittances,
this is pushing the peso higher.”
The
currency gained 0.4 percent to P41.865 per dollar as of
3:53 p.m. in Manila, according to Tullett Prebon Plc,
the world’s second-largest interdealer broker. It closed
at 41.88 to a dollar.
Separately, the nation’s bonds rose, pushing the yield
of the benchmark 10-year note to the lowest in more than
nine months, after the government said it probably had a
budget surplus in November on gains from the sale of its
stake in PNOC Energy Development Corp. A surplus
suggests it will need to sell fewer bonds.
The
yield on the 7.75 percent security due August 2017 fell
17 basis points to 6.79 percent, according to the
11:15 am fixing at Philippine Dealing & Exchange Corp. That is
the lowest since March 1. The price, which moves in the
opposite direction to the yield, gained 1.244, or P124
per P10,000 face amount, to 106.7133.
A basis
point is 0.01 percentage point.
The
government’s P47-billion share from the sale of 60
percent of PNOC Energy was booked last month, Finance
Undersecretary Jeremias Paul said Wednesday.
In
London, where she proceeded from a state visit in
Spain,
President Arroyo on Thursday assured overseas Filipino
workers that her administration is working on measures
to mitigate the diminution of the purchasing power of
their families in the
Philippines
due to the strong peso.
She also
sought to present the benefits of the strong peso, among
them relatively tempered oil price hikes in the country
compared with other oil importers.
“The
central bank is, by law, independent...so we cannot
influence the decisions of the central bank. But in any
case, I want to assure you we are mindful of the impact
on our overseas workers of a strong peso as you send
remittances home. And we are working on ways to mitigate
the impact of the peso on your families’ incomes,” she
said.
Among
these measures is the provision of special programs
developed by the Department of Labor and Employment for
families of OFWs, she added.
The
President also urged them to “enhance” their “financial
freedom” while the peso is strong by having sufficient
savings and “turning hard-earned money into solid
capital” through investments.
The
Chief Executive consoled Filipino workers with the
thought the stronger peso has benefitted their families
at home through tempered oil price hikes. “Because of
our strong peso, even if world oil prices are rising,
pump prices in the Philippines are not rising as much.
That is why jeepneys, buses and taxi drivers and
operators understand why we have not granted their
petition for a fare increase.”
Meanwhile, the president and chief executive officer of
the Development Bank of the Philippines (DBP), Rey
David, said Thursday he has stopped his habit of
regularly checking the exchange rate of the peso after
the exchange market rendered his yearend forecast rate
useless for planning purposes.
“It’s
very difficult to forecast the exchange rate now, and I
no longer try,” he said on Thursday.
According to David, DBP recently recast its forecast
exchange rate ranging from a high of P42.50 per dollar
to as low as P42.75 per dollar by year-end.
The
market, however, has moved higher since then.
“It
makes you think if there is a deliberate effort to make
the US dollar weak,” he thought aloud during a telephone
interview.
Much of
the peso’s strength, the monetary authorities said
earlier, can be traced to the fact that the dollar has
steadily weakened relative to most currencies, the
Philippine peso included.
While
this has become a problem for the country’s export
sector, it has benefited Filipino contract workers in
the euro area, such as those in Italy and Spain, David
said.
Analysts
from insurance firm Sunlife previously said the exchange
rate should strengthen to around P38 per dollar by next
year.
The
forecast assumes the continued inflow of foreign funds,
both direct and portfolio, whose presence has since
boosted prices at the Philippine Stock Exchange.
David
particularly noted the virtual absence of dollar
outflows, except the occasional demand from tourists and
the month-end requirements of the oil companies for
their oil imports.
But even
then, David said that while current OFW remittances are
copious for the moment, there is no assurance either
this will last very long.
“The big
question is, will the remittances still be big by next
year?” he asked. |
