PESO BREACHES 53:$1 LEVEL ON EXPECTED VAT PASSAGE
MANILA, April 14, 2005 (STAR) By Rica D. Delfinado - The peso broke through the 53 to a dollar level yesterday, boosted largely by the expectation that the new value added tax (VAT) bill will be passed shortly.
During intraday trading, the peso rallied to its strongest level since July 25, 2003 touching a high of 53.960 before finally closing at 54.100 to the dollar at the Philippine Dealing System (PDS).
Yesterday’s close was 7.5 centavos higher than Tuesday’s close of 54.175 to the dollar.
Analysts said the local currency also reacted positively to the strengthening of regional currencies against the dollar.
"The peso is reacting positively to the expectation that the value added tax (VAT) will be passed shortly. It is an important measure watched closely by the market. The strengthening of regional currencies is another positive factor for the peso," Bangko Sentral ng Pilipinas (BSP) Governor Amando Tetangco Jr. said yesterday.
Analysts also said other factors that contributed to the peso’s continued strength are the government’s steady progress in putting in place much needed fiscal reforms.
The peso’s rise is also being fueled by residents converting some of their dollar holdings into the domestic currency on expectations that the dollar will slide further, some traders said.
The peso opened strong at 54.120 before hitting a high of 53.960 and a low of 54.150 to the dollar. Volume turnover was heavy at $494.05 million on an average rate of 54.053 to the dollar.
Analysts said the peso could appreciate to as much 50 to a dollar as the fiscal reform program being put in place by the government continue to attract the attention of global investors.
Reported by: Sol Jose Vanzi
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