FRESH COUP JITTERS CONTINUE TO PUT PRESSURE ON PESO
MANILA, September 9, 2003 (STAR) By Des Ferriols - The peso dropped by 11 centavos yesterday, closing at 55.130 from Friday’s close of 55.020 to the dollar as the local financial market turned jittery on news of fresh coup attempts.
Traders said the Arroyo administration’s conflicting signals on whether or not it has contained the security threats on the eve of the President’s scheduled overseas visit created jitters in the foreign exchange market.
At yesterday’s trading at the Philippine Dealing System (PDS), the peso opened with relative strength at 55.040 to $1 but quickly lost ground to close at 55.130 to $1. Total volume traded amounted to only $75.5 million on an average rate of $55.060 to the dollar.
Bangko Sentral ng Pilipinas (BSP) Governor Rafael B. Buenaventura said the peso was reacting to various non-economic factors that were still hounding the market. "Beyond these non-economic factors, it’s obvious that our economy is otherwise doing quite well," he said.
Buenaventura said the BSP fully expects the peso to settle down eventually, but admitted it was unlikely that the exchange rate could still hit the original full-year projection made early in the year.
The BSP had originally projected the peso to hover at around 52 to the dollar by the end of the year.
But Buenaventura said the actual range could be closer to the high-end of 54 to 55 to the dollar.
According to a major market player, sentiments were being muddled by mixed signals sent by Malacañang over security issues, especially the threat of another coup.
"On one hand, Malacanang is saying that the threat was an empty one," said the trader. "But the other half of Malacanang is saying that the President has to cut short her trip because of domestic security concerns."
These signals, according to the trader, were confusing the market and causing uncertainty on whether or not the Arroyo administration really had the situation under control.
Reported by: Sol Jose Vanzi
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