The local currency the peso, which appreciated the past four weeks by around half a percent, closed 12.5 centavos higher on Thursday at P41.47 per dollar, boosting the likelihood that the local unit would gain more strength and end the year at about P40.80 per dollar under a foreign bank forecast.
At this level, the peso already exceeded the three-month outlook that the Manila unit of Citigroup released on Monday, when its chief economist for Asia and the Pacific said the currency should soon hit P41.50 per dollar.
Jonathan Ravelas, chief market strategist at Banco de Oro Universal Bank, said in a text message that the
market anticipates the peso to take the high road and gain even more strength as worker remittances flow more copiously in the remaining months of the year.
Money sent home by some 8 million overseas Filipinos has exceeded $11 billion in only the first half and should grow by at least 5 percent more than last year’s $22.3 billion.
Ravelas said that with the equities market index looking to hit 5,500 points, a surge in foreign buyers at the Philippine Stock Exchange should not come as a surprise.
As for the peso, he added, the exchange rate should not stray beyond P41.50 per dollar near-term.
Some traders said currencies in the region proved resilient also on Thursday no matter the impact of higher-than-anticipated jobs data in the US, which remains the largest trading partner of the Philippines.
Citi economist Johanna Chua, however, said yield-seeking foreign funds have since looked toward emerging markets like the Philippines whose growth and inflation dynamics offer the best possible returns and only minimum risk.
Also, the US Fed decision to embark on a third round of quantitative easing dubbed as QE3 adds pressure on fund managers to deploy the additional liquidity in so-called safe havens where returns are more or less guaranteed.
The problem with this is that there are few remaining safe havens that could be found anywhere at present and this was why emerging markets like the Philippines have become net recipients of foreign fund flows.
Countries not sensitive to asset- or property-price pressures should become natural targets for the yield-seeking foreign funds, Chua said.
QE3 has resulted in potentially more dollar liquidity than there are places to invest them in safely and destinations like the Philippines where inflation is benign and its fiscal sector continuing to consolidate have become attractive places for the fund managers, she added.
The peso averaged around P44.55 from 1998 up to present but has weakened past P56 per dollar at one point under the administration of then-President Joseph Estrada whose style of government partly led to his eventual ouster in 2001.-Black Pearl (October 05, 2012)
No comments:
Post a Comment