Peso hits 50 to a dollar

This could be the best time to go to the Philippines for a vacation. Your dollar would go a long way with the current exchange rate. However, this might not last long as exchange rates fluctuate daily.

Article Source: The Manila Times

Peso hits P50:$1, weakest in 10 yrs 0

CORPORATE demand for dollars weighed on the Philippine peso on Friday, driving the local currency to close at P50:$1, its weakest in over 10 years.

The local currency softened by 3 centavos from P49.97:$1 on Thursday. It opened at P49.94 to $1, before trading between P49.90 and P50.00 against US currency and lodged its weakest closing since it couched P50.12:$1 on November 16, 2006.

“Importers appear to have had a more significant-than-usual demand while the regular sellers were not as active in today’s trading session,” Bank of the Philippines Islands (BPI) Vice President and lead economist Emilio Neri Jr. said.

“Demand for USD throughout the week had pressured PHP leaving some traders to cover shorts before the weekend. Philippine specific factors such as recent political developments may have contributed but it is not likely to have been quite significant,” ING Bank Manila senior economist Joey Cuyegkeng, on the other hand, said.

The central bank noted that besides the prospects of an interest rate hike in the US next month, there was higher demand for dollars from corporates.

Bangko Sentral ng Pilipinas (BSP) Deputy Governor Diwa Guinigundo said the central bank continue to see negative market sentiment dominating the strong Philippine market fundamentals.

“We should see market reacting to news that OFW [overseas Filipino workers]remittances remain resilient and growth prospects remain very positive at the back of strong consumption, investment and public expenditures,” he said in a text message to reporters.

In real terms, the peso remains competitive and the BSP will continue to monitor pressure from a weak exchange rate even as the exchange rate pass through to domestic inflation has gone down in recent years, the BSP official noted.

“There is no substitute to constant monitoring and surveillance for any possible risks in the horizon,” he said.
ING’s Cuyegkeng said the peso could stay under pressure although seasonal inflows in March could lend a bit of strength.

“Retaining the P50 resistance early next week would be important. A convincing break above this may push PHP to the next target of P50.60,” he said.

“We are reviewing our forecast for end of the first quarter and for the rest of the year. We had expected PHP to trade around P49.70 and within the range of P49.50 to P50 in the first quarter,” he added.

Cuyegkeng said a faster pace of US Fed tightening and reflation policies of the new US administration to be announced in the next 10 days or so would likely affect forecasts.

For the year-end, ING expects the local currency to weaken to P51.50 to P51.80 per dollar.