work hard for the money

Peso slips back to P49.50:S1 on dim economic outlook
by Erik dela Cruz/BMirror/12.02.08

THE peso fell back to P49 per dollar on Tuesday as the global economic outlook deteriorated and investors to dump assets deemed risky, dealers and analysts said.

The peso opened on a weak note as stock markets around the region slumped on news that the US—a key market for Asian exports—has entered recession in December 2007.

Dollar sales by the Bangko Sentral ng Pilipinas (BSP), however, prevented a sharper fall of the peso, dealers said.

The peso hit a one-week low of P49.51 before closing at P49.50, weaker by 54 centavos than Friday’s close. The local unit lost most of its gains last week, its best weekly performance in four months.

A total of $582 million changed hands compared with Friday’s $616.90 million.

“Investors liquidated higher risk emerging-market investments following heavy losses on Wall Street,” said treasury vice president Lito Biacora of Bank of the Philippine Islands.

US stocks tumbled on Monday after more data suggested further weakening of the US economy and the National Bureau of Economic Research said the economy officially went into recession in December 2007.

“The BSP was in the market selling dollars at around P49.50,” a dealer said.

With the BSP’s continued intervention, the dealer said any weakness of the peso is likely to be “limited at the 49 level” in the coming days.

Jonathan Ravelas, chief market strategist at Banco de Oro Unibank, said he expected the peso’s weakness to be temporary given expectations of more foreign-exchange inflows this month.

“I’m still looking at 48.50 to 49 levels within the week,” he said.

Filipinos abroad are expected to send home more money for the Christmas shopping of their relatives. The surge in supply of dollars is expected to prop up the peso, dealers said.