MANILA, MAY 22, 2007
(BULLETIN) By FIL C. SIONIL - Amid heavy trading volume, the peso strengthened further yesterday, closing P46.31 per US dollar, a new seven–year record since October 2, 2000 and taking its gains so far this month to just over 2.5 percent.

The local currency even advanced versus the greenbuck, opening at a quote of P46.53, gaining further steam during the mid-morning trade to hit a new seven-year historic intraday high of P46.31.

Total dollars that changed hands reached a whooping $ 971.85 million, the biggest ever volume recorded so far in recent years.

Bank treasury officials and the monetary authorities unanimously cited the heightened inflows from both portfolio investments and overseas Filipino workers as the two compelling reasons for the sustained appreciation of the local currency.

"It reflects strong inflows from OFWs and foreign investments in equities, money market instruments as well as foreign direct investments," said Bangko Sentral ng Pilipinas (BSP) Deputy Governor for monetary stability Diwa Guinigundo said.

A trader said thr BSP has intermittently particpated in the trading, buying dollars at P46.57 rate to curb peso strength. However, the source said the intervention was not heavy.

Traders said the appreciation of the peso has, actually, prompted OFWs to send more dollars here relative to the amount they normally would remit on a monthly basis.

"The higher financial requirements of their beneficiaries at this time in preparation to the school year opening, also, inject additional push," a banker said.

Another trader from a domestic bank said the market was unperturbed with the decision of USbased credit rating firm, Standard and Poor’s (S&P) to keep the stable outlook on the Philippines, which is virtually a disappointment against expectations of the authorities.

"The market remained to be positive despite the S&P rating below expectation," the currency dealer said. As a measure of this, the trader said "more fund flows seen in the fixed and equities market."

"There are lots of flows from foreign funds coming into the market," said a Manila trader. "Stocks are strong and there are remittance flows."

Standard & Poor’s yesterday dashed government hopes for an upgrade as the US agency maintained current ratings and expressed longerterm concerns about Manila’s revenue base.

"Considerable progress has been attained by the current administration in addressing the country’s key credit constraint, namely its narrow revenues, and associated fiscal shortfalls," S&P analyst Agost Benard said in a statement.

However, it said the outlook "also takes into account the lingering uncertainty concerning the adequacy of the revenue base, in particular aspects of collection and administration efficiency."

Benard said revenue shortfalls so far this year highlight ongoing weakness, which in the absence of further revenue-generating steps, put a question mark over the administration’s ability to meet budget targets.

S&P said it is affirming its "BB minus/B" foreign currency and "BB plus/B local currency sovereign credit ratings, with a stable outlook.

Hard-fought tax reforms over the past two years helped stabilize the credit outlook and won investor plaudits for President Gloria Arroyo, who plans to use the extra funds to finance key infrastructure projects.

S&P said Manila’s credit outlook could be revised to positive if additional revenue measures are passed by Congress "including possibly the passage of existing fiscal initiatives that are currently on hold in the legislature."

Gov’t posts P2.3-billion savings from better energy management (MANILA BULLETIN)

The combined initiatives of the private sector and government to efficiently manage energy consumption resulted in a hefty P2.3-billion cost savings for the country, according to data logged by the Department of Energy.

The department noted the savings of 33 private companies recognized for their remarkable achievements in their energy consumption, through the 2006 Don Emilio Abello Energy Efficiency Awards, was estimated at P1.73 billion worth, translating to around 64.23 million liters of oil equivalent.

The implementation of the government energy management program for both the power and oil sectors, on the other hand, resulted in P613.86-million worth of savings for the periods from September 2005 to February 2007.

With this, the DoE said the country was able to save 68,064,235 kilowatt hours of electricity or about P522.23 million; while savings from reduced consumption of gasoline and diesel oil amounted to P91.63 million.

The move to cut down oil consumption was partly prompted by the relentless climb in global oil prices. Product usage-wise, this brought down gasoline consumption by 974,556 liters and 1,596,072 liters for diesel.

The cost savings registered by the recognized energy efficient companies and government entities, according to Energy secretary Raphael P.M. Lotilla is a testament to the recent survey result released by Grant Thornton International indicating that it was on the top of Philippine companies’ agenda to manage their respective energy consumptions.

"Their attitude and high level of awareness towards energy efficiency and conservation have not only contributed in lowering their business costs but also earned respect and admiration from other companies across the globe", the energy chief noted.

The Philippine businesses’ energy efficiency index, as compared to their global counterparts, was seen faring well. It surpassed the achievements of Brazil, China, Malaysia, Germany, Turkey, Poland, Hong Kong, Mexico and India.

"With the increasing prices of petroleum products in the international market, and the need to strictly comply with air emission standards and fuel efficiency measures, a growing number of private companies and government agencies are adopting energy conservation programs and practices," Lotilla has opined.

The set of incentives being offered by international institutions and nongovernment organizations also serve as stimulus for government and private sector entities to practice energy efficiency and conservation initiatives.

The energy conservation measures pushed by the government is also perceived delaying the timeline for the construction and commercial operation of new power projects in the country to meet future electricity demand.

The government is currently at the height of invitations for new investments both in the oil and power industries to ensure that the country will not suffer another round of energy shortfalls. (MMV)

Chief News Editor: Sol Jose Vanzi

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