firming up

Peso firms up on BSP intervention
by MEIC/BWorld/11.20.08

THE PESO yesterday backed away from the P50-per-dollar territory, thanks to central bank intervention that prompted banks to cash in.

It closed at P49.89 per dollar, five centavos firmer than Tuesday’s two-year trough after banks failed to break the crucial P49.999 per dollar level for two days in a row.

The local currency was locked in a tight trading range, opening weak at its intraday low of P49.999 per dollar and reaching a high of P49.84 per dollar.

"The BSP [Bangko Sentral ng Pilipinas] was obviously there to prevent the dollar from closing at the P50 per dollar territory. Banks just trimmed their long position because it was obvious they would not be successful. It has been two days since they tried to break P49.999 but failed," a trader said.

A "gentlemen’s agreement" that required banks to halve their dollar purchases from $50 million, or 20% of their unimpaired capital, kept banks from loading up on the US currency despite lingering worries over the health of the global economy, traders said.

"We buy on dips. Risk aversion is still there," a trader said.

A lack of demand from importers covering their dollar requirements also gave the peso support.

"There’s no commercial demand so the volume was meager. The trading range was very narrow," a trader said. -end-

the unsikable has become sinkable

Philippine peso trades near 18-month low on slowdown concern (Businessmirror, 10.21.08)

The Philippine peso traded near the lowest level in 18 months on speculation slowing economic growth will shrink company earnings and deter overseas investors. The peso may extend four weeks of losses after the government reported its budget deficit for the first nine months of the year was bigger than expected as slowing growth curbed revenue. Sales growth at the nation's telephone companies may cool as a weak global economy threatens the jobs of Filipinos working overseas, BusinessWorld reported today. ``We will probably see growth in remittances slowing dramatically by next year and, along with dwindling electronics exports, the inflow to the country could be drying up,'' said Radhika Rao, an economist at IDEAglobal Ltd. in Singapore. At the same time, ``we're still seeing net outflows from local stocks.'' The peso traded at 48.12 per dollar as of 10:24 a.m. in Manila, from 48.085 yesterday, according to Tullett Prebon Plc. It touched 48.27 yesterday, the weakest since April 2007, according to the Bankers Association of the Philippines. The budget shortfall for the nine months ended Sept. 30 expanded to 53.4 billion pesos ($1.11 billion), exceeding the target of 35.1 billion pesos as tax revenue weakened, Finance Secretary Gary Teves said yesterday. The peso may rally to around 47 per dollar by year-end as remittances increase before the Christmas holiday, IDEAglobal's Rao said. (Bloomberg)