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BANKS
like BPI Family Savings Bank are uncomfortable with the
peso’s strength, seeing its appreciation as “too rapid”
for businessmen to plan accordingly.
BPI
Family Savings president Alfonso L. Salcedo Jr. said
most bank executives felt the same and that the
long-term prognosis was for the peso to gain still more
strength down the line. “Actually, it’s a threat if the
peso gets too strong.”
Salcedo
noted the local unit posted a year-to-date gain of more
or less 18 percent; and colleagues said the rise by P1
to P41.30 per dollar of the peso from November 29 to
Wednesday led the export sector to realize the peso’s
advance is not yet at an end, and are preparing for this
expectation.
But
Asterio L. Favis Jr., executive vice president at the
Sterling Bank of Asia and head of treasury, said the
peso was headed for correction towards year-end.
He told
reporters the correction should weigh down the peso back
to P42 per dollar over the near term as overseas
investments and worker remittances slow down a bit.
He said
past market readings indicate overseas worker
remittances surge in the first two weeks of December,
but quickly peter out the rest of the month because by
then the fund requirements of their families for the
holidays have been met.
Favis
also believes, however, the peso may resume its march
forward by January but there is no telling how fast the
rate will be.
The
exchange rate stood at P49.045 in January when it
averaged for the month at P48.914 per dollar, but now
averages P42.018 per dollar at time of writing.
But
while the unit’s strength has complicated the lives of
exporters and has caused at least one senator to
dialogue with Malacañang on their behalf, there is not
much that government can do except institute measures to
help blunt the impact of rapid appreciation.
For
instance, Bangko Sentral ng Pilipinas governor Amando
Tetangco Jr. said they have no plans to borrow in
dollars next year while “Peso borrowings are related to
open market operations to maintain price stability.”
He also
said that while the outlook for inflation continues to
be benign, risks such as “volatilities in international
commodity and food prices as well as uncertainties in
global financial markets” remain.
Tetangco
said the US Fed’s decision to shave 25 basis points off
its key lending rate gave the BSP’s monetary board
“elbow room in monetary policy.”
Most
analysts interpret this as a signal that Tetangco was
not likely to introduce another cut in the rate at which
the BSP borrows from or lends to banks, higher inflation
in November having reduced that likelihood further. |
