Business Mirror, 11.19.08
THE peso closed firmer on Wednesday after a two-day slide, and traders said the thin volume of dollars that changed hands suggested market players were in a wait-and-see mode.
The Philippine unit hit a low P49.999 for the second day in a row before closing at P49.890 per dollar, up 5 centavos from Tuesday’s close. Volume thinned to $292.80 million from the previous session’s $498.64 million.
“It was a quiet day but I think market players were just waiting for new developments,” said one trader.
“We did not see any big dollar demand and supply, and there were no fresh reasons for the market to pull the peso lower,” the trader further said. The local equities market also rebounded on Wednesday from recent sell-offs triggered by continued risk aversion due to fears of a severe global recession.
Traders said the Bangko Sentral ng Pilipinas, which is set to review its monetary policy on Thursday, was not seen in the market unlike in Tuesday’s session when it was noted to have propped up its unit from sliding beyond the crucial P50-per-dollar level.
Economists expect the central bank to keep key interest rates steady after cutting bank reserve requirements by 2 percentage points to 19 percent effective November 14, a measure that was estimated to boost liquidity in the system by about P60 billion.
However, others are of the view that lowering the cost of borrowing is now necessary to effectively shield the domestic economy from external shocks.
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