PESO RALLIES TO 47:$1 ON HEAVY OFW INFLOWS
MANILA, DECEMBER 12, 2008 (STAR) By Des Ferriols - The peso broke yesterday into the 47 to $1 territory, fueled largely by heavy dollar inflows from overseas Filipino workers (OFWs) and optimism brought about by the approval of a huge bailout package for the ailing US auto industry.
The peso opened strong at 47.980 to the dollar after closing at 48.250 to $1 Wednesday and continued to appreciate during the day to finally close at the intra-day high of 47.780 to the dollar. Yesterday’s close was the strongest since the peso last touched the 47.610 level on Oct. 15, 2008.
Total transaction volume amounted to $747 million on an average rate of 47.918 to $1.
Bangko Sentral ng Pilipinas (BSP) Deputy Governor Diwa Guinigundo told reporters yesterday that sentiments were improved, with greater optimism spurred by the bailout package for the automotive industry and US financial institutions as well.
“They’re talking of a big bailout package and that is meant to shore up confidence,” he said. “This has also affected sentiments in a positive way in the Philippine market.”
Guinigundo added that the decline in the national average inflation rate also added to the market optimism, as the rate dropped to 9.9 percent in October, hitting single-digit levels much earlier than projected by the BSP.
“The market is now more confident that indeed inflation has peaked in August, much earlier compared to what we expected that single-digit inflation will be achieved sometime in the first quarter of 2009,” he said.
Foreign exchange, however, were still bleeding out of the market, reversing last year’s record net inflows of $3.7 billion and ending the January to November transactions into a net outflow of $1.3 billion.
The steady outflow of foreign exchange, combined with weaker export earnings and foreign direct investments, are expected to keep the peso from surging as it did in 2008.
But Guinigundo said remittances from overseas Filipinos would provide some cushion to the peso as well as the decline in global oil prices which would make imports significantly cheaper than last year.
Chief News Editor: Sol Jose Vanzi
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