PESO CLOSES AT NEW 7˝-YEAR HIGH OF 41.58
MANILA, DECEMBER 11, 2007 (STAR) By Des Ferriols - The peso closed at 41.580 to a dollar yesterday, charting a new high in seven-and-a-half years as the market awaits another cut in US interest rates and renewed investor appetite ahead of a Federal Reserve policy decision.
The peso made a strong opening at yesterday’s session, immediately testing the 41.50 to $1 level that the market had predicted as the next resistance level.
Traders observed that most Asian currencies also appreciated against the dollar but the peso was the strongest performer yesterday despite the strengthening of the dollar due to non-farm payrolls data on Friday that showed a steady unemployed rate and somewhat tepid gains in US jobs.
The US Federal Reserve Board is widely expected to make another 25-point cut in its key rates, a move that traders said the market has already discounted.
If the US Fed should decide on a less likely 50-point cut, traders said Asian currencies could strengthen further this week as investors flock to Asian stock markets.
The performance of the peso yesterday brought the currency closer to its next highest record of 41.560 to the dollar last seen on May 15, 2000. So far, the peso has appreciated by almost four percent this month and by 18 percent this year.
Traders cautioned, however, that the peso’s rally might see some signs of pulling back this week due to profit-taking as well as the seasonal winding down of remittance flow from overseas Filipinos.
Should the peso break past the 41.50 level this week, the next record to be broken would be 41.430 to the dollar which was last seen on May 11, 2000.
Traders said the BSP had been in the market but “only very lightly” and not aggressively trying to cap the appreciation of the peso against the dollar.
The peso has been persistently strong since last year, even managing to rise on the day that the market was rocked by an attempted coup led by Sen. Antonio Trillanes IV.
Although there was a knee-jerk reaction shortly after Trillanes and his men took over the Manila Peninsula Hotel in Makati, this proved short-lived and the peso rebounded at the end of the session.
In its market report, Morgan Stanley noted that Trillanes’ call for public support went largely unheeded and despite his strong showing in the May polls, he did not necessarily command strong following.
“We believe such successful tests will reinforce investor confidence in the political backdrop, not undermine it,” said Morgan Stanley.
“So, rather than being a negative shock for the peso, we interpret this failed coup attempt as a confirmation of our call that the Philippine political backdrop remains stable.”
Having said this however, Morgan Stanley said the appreciation of the peso against the US dollar would not generate long-term benefits unless accompanied by strong macro-economic milestones such as fiscal consolidation and sound monetary policy.
Businessmen want to seize the moment TAKIN’ CARE OF BUSINESS By Babe Romualdez Tuesday, December 11, 2007
Philippine Chamber of Commerce and Industry (PCCI) president Sammy Lim had a bright idea of wanting to get the three former presidents and GMA together in one forum where, barring all politics, they would discuss how they foresee the country beyond 2010. Sammy’s idea is to be able project to the world especially to the international business community that we may have political differences, but at the end of the day we are all united in the desire to see this country achieve progress.
Nothing could be a more convincing proof than the photo of the former presidents and GMA in one room putting their heads together, working out a vision for the country by 2020. This will not only be a historical but a powerful moment that must be seized – which will have an awesome effect pretty much like the photo of Bill Clinton with three former US presidents – George Bush Sr., Jimmy Carter and Gerald Ford – when they traveled to the Middle East for the funeral of Jordan’s King Hussein.
Sammy sees the Philippines on the verge of a real economic takeoff, but one lacking thing at this point which continues to keep the country divided is political unity – which hopefully can be overcome if this country’s leaders agree to sit down and work together to do what would be best for the people, beyond personalities.
Former Finance Secretary Jose “Titoy” Pardo had his wedding anniversary party at his Alabang home last Sunday, where he invited the “who’s who” in business and politics. I give Titoy full credit in gathering two former presidents – Cory Aquino and Joseph Estrada – with two of the top presidential contenders for 2010, Nacionalista Party stalwart Manny Villar and Liberal Party president Mar Roxas who arrived with his anchor in life, Korina Sanchez. Speaker Joe de Venecia was also there with his wife Gina.
Religious leaders were also present like His Eminence Ricardo Cardinal Vidal and Mike Velarde. Among the business tycoons were Ramon Ang, Tonyboy Cojuangco, Tessie Sy-Coson and Andrew Tan. Business leaders like PCCI chairman Mike Varela, PhilExport CEO Sergio Ortiz-Luis, Filipino Chinese Chamber of Commerce and Industry (FCCI) president Francis Chua and Zesto owner Fred Yao were also there. Titoy, who is a member of the PCCI’s council of senior advisers, is one of those who is also hoping that unity can be achieved in the country by putting together as many people with different political persuasions in one gathering and hopefully start the process of reunification.
The anniversary party at Titoy’s house was purely a social gathering but since there were many diplomats present – British Ambassador Peter Beckingham, Saudi Arabian Ambassador Mohammed Ameen Wali, Ambassador Mario Schuff of Argentina, Singapore’s Ambassador Lim Keng Hua, New Zealand Ambassador David Pine and Canadian Ambassador Robert Desjardins – the undertones took on a note of international concern, with everyone agreeing that the country’s leaders – be they in politics or business – have to set aside their differences to unite the country and get the economic wheels rolling uninterrupted.
The period beyond 2010 would be a good target because by then the country will have new political leaders who could help the people forget the animosities created by the two EDSAs and convince them that keeping the baggage of the past will only be a burden. Hopefully the new leaders would have the vision of uniting the country and finally get it moving. JDV, who remains with the administration, says he, too believes it’s about time everyone joined forces for the sake of the country. Guests had a good laugh however when Erap, with his usual “Eraption” joke said, “Everybody knows Joe is already with the opposition except him.”
I asked Mar what he meant by warning about the consequences of a strong peso. Mar had previously said three key sectors – the OFWs, the export businessmen and business process outsourcing operators – will be affected if government did not intervene to arrest the peso’s surge. It will be difficult to stop the depreciation of the dollar, however, since it continues to display a weak performance against a number of major currencies. As a matter of fact, the exchange rate in Thailand is now at 32 baht to the dollar.
Mar explained to me that the country should stop borrowing now – with former budget secretary Ben Diokno totally agreeing, saying we should just borrow internally rather than outside since we’re currently awash with dollars, in order to stabilize the peso. No doubt Mar is playing up to the OFWs and workers particularly in the export sector whom he warned could be the laid-off because of the appreciation of the peso – all of these in keeping with his Mr. Palengke image.
This lead being taken by the PCCI and Titoy Pardo is a very good start. Even former president Joseph Estrada had agreed, saying he has no problems with it especially if Mrs. Aquino would be there. Erap said he had never lost his respect for Mrs. Aquino in spite of the fact that she was one of those who wanted Estrada to resign during his term. Getting the three former presidents and GMA together will be a historic moment not only for the photo op value, but more importantly, it would send a clear and positive message not only to the international business community but to Filipinos themselves – that the time has finally come for everyone to unite for “la patria.”
Chief News Editor: Sol Jose Vanzi
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