PESO  IMPROVES  TO  NEW  8-MONTH  HIGH  VS.  DOLLAR

MANILA, January 21, 2005 (STAR) By Des Ferriols - The peso continued to gain ground against the dollar, closing at a new eight-month high of 55.46 to $1 as demand for the greenback eased yesterday.

At the Philippine Dealing System (PDS), trading was brisk with total volume reaching $322 million.

The local unit opened at 55.55 before finally appreciating to as high as 55.41 to the dollar.

At the Philippine Stock Exchange (PSE), the 30-company composite index neared the 2,000-point level, closing to a new five-year high of 1,956.82. It was the index’s best finish since Feb. 14, 2000 when it closed at 1,976.74 points.

Traders said recent positive economic data such as the below-ceiling budget deficit for 2004, robust exports and estimates that the economy in 2004 grew stronger than the government’s target, inspired investors to continue accumulating select stocks.

The Bangko Sentral ng Pilipinas (BSP) said inflows are still making the foreign exchange rate very fluid although officials said the market was also expressing some degree of optimism over the government’s fiscal position.

The BSP said part of the peso’s strength was due to the initial reaction to the 2004 deficit which turned up P10 billion less than expected despite the increase in debt payments due to the depreciation of the peso last year.

BSP Governor Rafael Buenaventura said the peso would continue to gain ground this year although he said the BSP is still closely watching the behavior of oil prices abroad.

For 2005, the BSP projected that the average peso-dollar exchange rate would range between 54 and 56 to the dollar.

"At least now we are going in the same direction as the rest of the region, even if these are baby steps," Buenaventura said. He said he expected the peso to remain relatively strong for the first half of the year.


Reported by: Sol Jose Vanzi

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