PESO HITS 31-MONTH HIGH OF 53.03 TO $1
MANILA, December 29, 2005 (STAR) By Rica D. Delfinado - The peso nearly broke through the 53 to a dollar psychological barrier yesterday, hitting a high of 53.030 during intraday trading on the back of continued strong dollar remittances from overseas Filipino workers (OFWs).
At the Philippine Dealing System (PDS), the peso closed at 53.080 to $1, its highest level since the peso last touched the 52.88 to $1 rate on May 27, 2003.
Yesterday’s closing rate was 10 centavos higher than Tuesday’s close of 53.180, bringing gains this year to six percent, according to the Bankers Association of the Philippines (BAP).
"I’ve heard that some Filipinos carried cash back to the Philippines and converted some of the money post-Christmas for the year-end celebrations,’’ said Leslie Khoo, a Singapore-based regional economist at Forecast Ltd. "The peso may rise to 53 to $1 this week," Khoo added.
At yesterday’s trading, the peso opened strong at 53.150 before hitting a high of 53.030 and a low of 53.160 to $1. Total transaction amounted to $259 million on an average rate of 53.067 to the dollar.
Remittances make up about a 10th of the local economy. The country is ranked third in terms of money sent home each year, after Mexico and India, according to the Asian Development Bank.
The Bangko Sentral ng Pilipinas (BSP) raised its full-year projection for the current-account surplus to $2.5 billion from an earlier estimate of $1.6 billion, on expectations of increased remittances from citizens living abroad in the last quarter.
The current account includes the balance of trade, remittances and other income from abroad.
The BSP said remittances from about 7.4 million Filipinos working overseas may rise as much as 20 percent to $10.3 billion this year and 10 percent in 2006.
Funds from Filipinos abroad in the first nine months rose 28 percent to $7.9 billion from the same period a year ago, the BSP said.
Analysts said with its strong showing, the peso is headed for its first annual gain versus the dollar since 1998.
They also said the peso is now the best performer among 15 Asia-Pacific currencies as the government implements policies to raise revenue and cut the budget deficit.
Debt reduction is not possible until NG posts budget surplus By Des Ferriols The Star 12/29/2005
Much as the National Government (NG) wants to reduce its debt burden, the Arroyo administration said this is not possible until the government is able to post a budget surplus that could be used for repayments.
Finance officials said yesterday that although the country is entering 2006 with a strong balance of payments which monetary officials said could be sustained and even duplicated in 2007, there is still a budget gap that will have to be financed through borrowing.
Finance Undersecretary Roberto Tan said, however, that the government can reduce its foreign borrowing as suggested by the Bangko Sentral ng Pilipinas (BSP) and borrow more from domestic creditors.
"Our foreign and domestic borrowing effort serves two purposes: one is to refinance our debts and the second is to finance expenditures that could not be financed with revenues," Tan explained.
"The only way we can reduce our debt stock is to first eliminate the deficit and then create a surplus," Tan said. "Then, we will have money left over to pay off some of our debts and reduce the overall debt stock."
However, Tan said there could be a shift in the government’s borrowing mix although the Development Budget Coordinating Committee has not changed the programmed levels from its current 60-40 proportion, in favor of domestic borrowing.
The government had planned to borrow an equivalent of P531.6 billion next year or close to eight percent lower than this year’s P576.4 billion. About 42 percent of the borrowing requirement, or P221.4 billion ($4 billion), would be raised from foreign lenders while 58 percent or P310.2 billion, would come from domestic sources.
Excluding the amortization on maturing loans, the net financing requirement of the national government is expected to drop by as much as 31 percent to P150 billion in 2006 from P215.7 billion in 2005.
On the other hand, the national budget is not programmed to turn around to surplus position until after 2008 despite the failure of Congress to pass the 2006 budget in time; effectively forcing the national government to live by the re-enacted 2005 budget at least for the first three months of the year.
The BSP had originally suggesting that beginning 2006, monetary officials said the government could afford not only to shift its borrowing mix in favor of domestic borrowing but also to repay some of its debts to reduce its total debt burden.
Chief News Editor: Sol Jose Vanzi
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