PESO NEARS RECORD LOW DUE TO POLITICAL WOES

MANILA
, June 18 , 2004
 (STAR)
By Des Ferriols  -  The peso slipped near a record-low yesterday, hitting an intraday low of 56.40 to the dollar amid persistent political concerns arising from a delay in the congressional vote count for last May’s presidential election.

At the Philippine Dealing System (PDS), the peso finished at 56.355 to the dollar, its lowest in nearly three months but off the record closing low of 56.42 last touched on March 22.

Yesterday’s closing rate, however, was 10.50 centavos lower than Wednesday’s close of 56.250 to the dollar.

Traders said demand for dollars was still strong and the effect on the exchange rate was compounded by the decline in dollar remittances from overseas Filipino workers (OFWs).

They also said the market was also anticipating a break-out of mass protests over allegations of cheating against popular presidential candidate, Fernando Poe. Jr.

Adding to the worries were threats by legislators allied to opposition candidate Poe to walkout on the ongoing congressional vote tally.

Another dealer said there was also a negative backlash over the latest unemployment figures which indicated a dramatic increase in the number of jobless Filipinos.

The National Statistics Office (NSO) reported on Wednesday that the country’s unemployment rate as of end-April rose to 13.7 percent, the highest in two years.

The Bangko Sentral ng Pilipinas (BSP) agreed that political concerns were putting more strain on the peso-exchange rate.

"Both foreign and locals feel that because of politicking, we might be unable to work on our recovery agenda," BSP Governor Rafael Buenaventura said.

"We’re still paying a huge political premium," he said.

Buenaventura said it was understandable for the peso to fluctuate heavily due to political concerns.

According to Buenaventura, it would take time for investors to regain confidence once the May elections is over and the new administration takes over regardless of who would win.

"Obviously, the dynamics would not return to normal until the second semester and by then, we expect some improvements in the inflows," Buenaventura said.

Foreign inflows are expected to return in the second half and give the BSP an additional boost in its international reserves, a facility that it uses to shield the peso against speculative attacks.


Reported by: Sol Jose Vanzi

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