PESO SURGES TO 6-YEAR HIGH
MANILA, DECEMBER 19, 2006 (STAR) By Des Ferriols - The peso climbed to a near six-year high yesterday, closing at 49.32 to the dollar as investments and other inflows brought more dollars into the system to prop up the currency.
The peso opened strong at 49.31 to the dollar and traded strongly throughout the day before closing at 49.32 to the greenback with total volume at $350.21 million.
The peso last touched this level in March 2001 when it closed at 49.215 to the dollar. At the time, however, the peso’s momentum was taking it to the opposite direction as the country reeled from political instability that later led to the ouster of Joseph Estrada from the presidency.
This time, the peso is being drawn inexorably toward appreciation, bolstered by a healthy supply of dollars that pushed the country’s international reserves to record-high levels despite high oil prices.
As expected, the peso has been tracking higher throughout the last quarter, buoyed by seasonally strong inflows from overseas Filipino workers.
Also, the dollar has been experiencing weakness against regional currencies.
Bangko Sentral ng Pilipinas (BSP) Governor Amando Tetangco Jr. said the peso remained supported by investments and other inflows this month mainly due to strong OFW remittances.
The BSP has been downplaying the appreciation of the peso, however, with Tetangco saying that the exchange rate was no more volatile than other regional currencies.
"We have been well within the volatility band in the region, what the peso is doing, so is every other currency in the region," he said.
However, sectors affected by the appreciation of the peso have been lobbying for the BSP to intervene, a suggestion quickly rejected by monetary officials who said their mandate was to merely smoothen volatility.
However, the BSP said it was planning to restore the limit on the short or oversold position of banks, a move that would further cap the appreciation of the peso.
The BSP has refused to actively dip in the currency market to tip the exchange rate but the restoration of the oversold limit as well as the proposed increase in overbought limits of banks would both have the effect of reining in the appreciation of the peso.
Tetangco told reporters that the BSP was considering the possibility of restoring the oversold limit, which was lifted shortly after the Asian crisis in 1997.
Banks trade for their clients, as well as for commercial requirements and their own account. When they trade for their own accounts, banks are guided by the allowable overbought foreign exchange positions set by the BSP.
Banks’ long or overbought foreign exchange positions were not allowed to exceed 2.5 percent of their unimpaired capital or $5 million, whichever is lower. At present, there is no limit on banks’ short or oversold positions.
Tetangco said however that the BSP would restore the limit on banks’ short or oversold position, indicating that the move would be made to "avoid wild swings in the currency."
Previously, Tetangco has been arguing that despite its appreciation, the peso was merely tracking the movement of regional currencies and did not show any indication of excessive volatility.
Gov’t to get P29-B PTIC shares By Mike Frialde The Philippine Star 12/19/2006
The Sandiganbayan’s fourth division ordered yesterday the transfer of P29 billion worth of Philippine Telecommunications Investment Corp. (PTIC) shares to the government after the Supreme Court ruled that they "bear the character of ill-gotten wealth" accumulated either by the late strongman Ferdinand Marcos or the late businessman Ramon Cojuangco.
In an eight-page resolution, the anti-graft court ordered PTIC’s corporate secretary to cancel the 111,415 shares registered in the name of Prime Holdings Inc. (PHI) and to issue new certificates in the name of the Republic of the Philippines to comply with the Supreme Court’s Jan. 20 ruling.
Presidential Commission on Good Government Commissioner Nicasio Conti said the PCGG will immediately deliver the new stock certificates to the Department of Finance, which has already pre-qualified a number of bidders who expressed interest in buying the PTIC shares.
The PCGG estimates the auction of the PTIC shares to fetch between P25 billion to P29 billion.
"We would like to commend the Office of the Solicitor General and the lawyers of the PCGG legal department for their diligent effort in seeing this case to its conclusion. This has been a difficult case and a great victory for the people," Conti said.
The Sandiganbayan ordered the transfer after it overruled the objections filed by intervenors Alfonso Yuchengco and Y Realty Corp. and defendants PHI, estate of Ramon Cojuangco and Imelda Cojuangco, who cited the pendency of an omnibus motion before the Supreme Court seeking permission to file a third motion for reconsideration.
"All told, there exists no legal impediment for the immediate enforcement of the (SC) decision dated Jan. 20, 2006. Verily, accepting the proposition that mere filing of a third motion for reconsideration after an entry of final judgment had already been issued and even after a second motion for reconsideration had already been denied, as in this case, would only lead to absurdity," the Sandiganbayan said.
Chief News Editor: Sol Jose Vanzi
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