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By Maricel E. Burgonio, Reporter
THE Bangko Sentral ng Pilipinas (BSP)
warned that the peso’s rapid appreciation risks financial
volatility, as the local currency closed the week at its strongest
in seven years buoyed by continued dollar inflows to the Philippine
stock market.
At the Philippine Dealing System,
the local unit closed at 44.80 against the dollar on Friday from the
closing price of 45 the day before.
The peso opened at 44.999 and
rose to its closing price. Trading volume amounted to $517 million.
“The peso is buoyed by
equity-related inflows and is moving up against the US dollar like
the other regional currencies,” BSP Governor Amando M. Tetangco
Jr., said, referring to increased foreign interest in the local
stock market as a number of Philippine companies are selling shares
to the public for the first time. These include Aboitiz Power Corp.
and GMA Network.
Foreigners likewise are buying
into the success of a number of companies that have taken advantage
of low interest rates to raise money in the form of follow-on share
offerings.
“Still the rapid pace of
appreciation is of some concern since this tends to increase
volatility,” Tetangco said.
The BSP has forecast the local
currency to average between 47 and 48 to the greenback this year, or
better than its original estimate of 48 to 50. The central bank
ascribed the upward revision of its forecast to strong foreign
exchange inflows in the form of overseas Filipino worker (OFW)
remittances, foreign portfolio and direct investments.
“The peso is better ahead of
the State of the Nation address [SONA] of President Arroyo on
Monday,” a trader said.
“[It] is market driven and the
BSP only [bought] at 44.80 to 44.85 level for about $100 million,”
the trader added, referring to the central bank’s intervention
through the purchase of dollars aimed at stemming the local
currency’s rise.
The peso is seen to further
appreciate to 44.50 until next week although OFW remittance inflows
are still smaller. Remittances are usually high in the last week up
to the first week of a month.
The BSP earlier said that OFWs
will send home $14 billion this year from $12.8 billion last year.
Strong remittances as well as foreign investments and resilient
export receipts have led the central bank to revise upwards its
forecast for the country’s dollar surplus, and consequently its
dollar reserves.
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