PESO CLOSES AT 4-MONTH HIGH OF 55.46 TO THE DOLLAR

MANILA
, May 6 , 2004
 (STAR)
By Rica D. Delfinado - The peso regained more ground against the dollar to close at its strongest level in four months yesterday as the pre-election political concerns that previously weighed on the local currency have somewhat eased, traders said.

Analysts said currency traders also continued to price in a possible victory for incumbent Mrs. Arroyo, who has widened her lead over opposition candidate Fernando Poe Jr. five days before the presidential elections, according to the latest poll by independent research firm Pulse Asia.

At the Philippine Dealing System (PDS), the peso gained another 25 centavos to close at 55.460 to the dollar, after trading between 55.420 and 55.620. It was the peso’s strongest finish since Jan. 14, when it closed at the same level.

The peso closed at 55.710 on Tuesday.

Trading was heavy at $251.70 million, reflecting strong corporate demand for the greenback.

"There has been a reversal of sentiment from the overly negative one early this year, due to political uncertainties, to growing optimism that investors will be coming back after May 10," a commercial bank dealer said.

"It’s not only the possibility of a fresh mandate for President Arroyo, but also the fact that the election season will soon be over."

Dealers said the peso also strengthened in step with other regional currencies.

"Regional players are shorting the dollar, while local players are expecting more inflows of foreign direct investments, as well as portfolio money, after May 10, especially if the elections turn out to be peaceful," the dealer said.

"The positive sentiment is reflected by the fact that, despite the huge corporate demand for dollars, as seen in yesterday’s volume, the peso still recovered strongly."

Pulse Asia’s latest poll of 1,800 registered voters, conducted April 26 to 29, showed 37 percent in favor of Mrs. Arroyo, compared to 31 percent for Poe, the popular movie star whose candidacy had spooked financial markets because of his unimpressive educational background and lack of experience in public office.

The peso may trade between 55.20 and 55.45 today and could even recover back to the 54 level after the elections, the dealer added


Reported by: Sol Jose Vanzi

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