PESO CONTINUES TO GAIN ON HEAVY DOLLAR INFLOWS
MANILA, April 15, 2004 (STAR) By Des Ferriols - The peso continued to strengthen yesterday, hitting an intraday high of 55.660 to the dollar as strong dollar inflows continued to buoy the local currency after months of continued decline.
At the Philippine Dealing System (PDS), the peso stayed within the 55 to $1 level, closing at 55.80 for two days in a row as banks continued to dispose of their dollar holdings.
The peso opened at 55.850 before hitting a high of 55.660 and a low of 55.870 to the dollar.
Monetary officials said today’s policy-setting meeting of the Monetary Board is likely to be neutral at most, with no immediate indication of any increase in key interest rates due to the recent strengthening of the peso against the dollar.
The market has been expecting the BSP to increase its rates but officials have been careful not to provide any hint of its plans to prevent speculative attacks on the peso.
The peso fell to a record low of 56.45 to the dollar last month on rising political uncertainty. For the first time in nearly three months, the peso breached the psychological resistance of 56 to $1 on Tuesday to close at 56.80 to the dollar.
As the market continued to dump their dollar holdings, the day’s trade reached $156.43 million, down from $257.5 million on Tuesday but still higher than the usual daily volume of $80 to $120 million.
Traders said dollar inflows remained high because of the build-up during the Holy Week and banks had to unload their dollar holdings in order to stay within the overbought limit of the BSP.
Monetary officials, however, were careful not to attribute the peso recovery to any of the presidential candidates but traders said the market was hoping for the "least disruptive option."
"If things continue to be calm and routine until May, the peso would also continue to be stable," one bank official said. "We are watching for renewed volatility but I hope it continues range-bound from here on."
Reported by: Sol Jose Vanzi
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