PESO PLUNGES TO ALL-TIME LOW OF 55.85 TO A DOLLAR
MANILA, January 27, 2004 (STAR) By Des Ferriols - The combined impact of market pessimism, strong corporate demand for the dollar and weak regional currencies sent the peso plummeting yesterday to an all-time low of 55.850 vis-a-vis the dollar.
Yesterday’s closing rate brought the peso closer to the 56 to the dollar psychological barrier.
The last time the peso hit the 55.850 level was in Nov. 27 last year after popular actor Fernando Poe Jr. announced his presidential bid.
At the Philippine Dealing System (PDS), the peso opened weak at 55.750 before hitting an intraday low of 55.85 to the dollar. The peso found resistance at 55.75 but failed to stage a recovery in the afternoon trade.
Total volume traded amounted to $91.50 million on an average rate of 55.803 to $1.
BSP Deputy Governor Amando Tetangco Jr. said the weakness of the peso was largely due to weak regional currencies.
"There was also high corporate demand," Tetangco said, referring to the usual increase in corporate dollar requirements at the end of every month.
BSP Governor Rafael Buenaventura has warned repeatedly that much of the uncertainty in the market stemmed from the fact that none of the presidential candidates have made any clear statement indicating the direction of their economic agenda.
"As far as investors are concerned, they want the democratic processes to run the full course," Buenaventura said. "We all want to see a clean and orderly election to take place that would give a clear mandate to whoever wins the presidential race," he added.
Buenaventura refused to speculate on Moody’s possible decision to downgrade the country’s credit rating.
But other sources said the best the country could hope for was a one-notch downgrade in the country’s foreign borrowings and possibly a two-notch downgrade on domestic borrowing, with the outlook firmly at "stable."
According to a source, if Moody’s decide on a one-notch downgrade on both foreign and domestic borrowing, the outlook would likely be at "negative" which would mean that another downgrade could still happen in the immediate future.
"The bad news on the political side has not affected our macro-economic numbers but they are preventing us from achieving better economic results," Buenaventura said.
Buenaventura said the election campaign should instead focus on the discussion of economic platforms. "We have to make investors more relaxed in the knowledge that candidates have the economic interest at heart," he said.
The BSP chief said that economic agenda was less important to the voting masses, it was the focus of most investors. "Unfortunately, there is absence of appreciation for economic programs," Buenaventura said. "Investors must be convinced that any administration has the same resolve because of the gestation period of investments."
Reported by: Sol Jose Vanzi
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