PESO STAGES MILD RECOVERY ON STRONG OFW REMITTANCES
MANILA, July 10 , 2004 (STAR) By Des Ferriols - The peso staged a mild recovery yesterday on the back of strong regional currencies and remittances from overseas Filipino workers (OFWs), closing at 55.79 after edging close to 56 to the dollar at the beginning of trade.
The peso has been range-trading since Congress completed its vote canvassing but yesterday’s session was marked by a 14.5-centavo recovery after days of relative quiet.
At the Philippine Dealing System (PDS), the peso opened weak but managed to recover by mid-day to hit a high of 55.780 to the dollar.
The peso finally ended the day at 55.79 to the dollar with total volume reaching $188.5 million.
The Bangko Sentral ng Pilipinas (BSP) said the strength of the peso came from strong dollar inflows from overseas Filipinos.
BSP Deputy Governor Amando Tetangco Jr. said banks were also short-selling because of strong regional currencies which had been in a slump early on.
Right after the election, the peso dipped to a historical low of 56.43 to the dollar as the Congress canvassing deteriorated over the protests of the opposition against alleged cheating in the counting of votes down to the precinct level.
Banks, on the other hand, have been expecting the peso and bond markets to recover dramatically after the election once the political uncertainty over leadership has been removed.
Foreign banks, in particular, were optimistic that the new administration would enjoy at least a hundred-day honeymoon period while awaiting the critical appointment of the new economic team.
The BSP said the peso could recover to 54 to the dollar but foreign banks were even more optimistic, saying that the peso could bounce back to early 2003 level of 52 to the dollar.
Traders said the market was likely to give the Arroyo administration the traditional 100-day honeymoon period although there would be a tight watch on how the economic agenda would unfold over the next few months.
Reported by: Sol Jose Vanzi
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