|
By Maricel E. Burgonio, Reporter
INVESTOR risk aversion pulled down the peso this
week, with traders expecting the local currency to succumb to
further downward pressures next week.
At the Philippine Dealing System, the peso
closed at 41.91 against the dollar on Friday, or the same as
Thursday’s finish. The local currency however opened lower at
41.93 and slid to 41.95 before recovering later in the day.
Total volume turnover reached $499.650 million,
lower than the $534.500 million the previous day.
Traders said the peso is expected to breach the
42-to-a-dollar level next week due to risk aversion, as reflected in
lower foreign portfolio investments.
Also called hot money, portfolio investments
posted a net outflow of $40.79 million last month, a reversal from
the net inflows of $838.05 million in the same period last year.
Gross inflows reached $3.035 billion, lower than the outflows of
$3.086 billion during the period.
Besides the US subprime mortgage crisis,
investors remain spooked by high inflation.
“It’s because of risk aversion due to
recurring negative news from the credit market plus the selling of
equity and [foreign-currency Treasury notes] by offshore players,
[which] exacerbate[d] the pressure on the peso,” Marcelo Ayes,
Rizal Commercial Banking Corp. senior vice president for financial
markets, said.
“We expect it to trade at 41.850 and 42.05
next week,” he added.
Despite next week’s likely slide, the peso is
seen to recover later this month, traditionally a high-remittance
period. More remittance inflows from overseas Filipino workers are
expected in time for the payment of school fees in June.
Last Thursday, Metropolitan Bank and Trust Co. (Metrobank)
said the Bangko Sentral ng Pilipinas (BSP) capped the dollar rally
at P41.93.
The market is also pessimistic about the
government’s fiscal management, expecting higher dollar
requirements for payment of rice and oil imports.
The peso however would recover if it breaks past
41.93, with buyers expected to emerge near 41.60 where the BSP has
consistently defended the local currency.
“The BSP has been vigilant on both sides of
the picture, keeping volatility at manageable levels,” Metrobank
said.
Standard Chartered Bank earlier said the peso
will weaken to 43 for every dollar by the end of the year on
expectations that the government’s revenue effort would flag down.
Rising inflation has been negative for the peso.
Price increases accelerated to a 20-month high of 6.4 percent in
March from 5.4 percent in February driven by high prices of fuel and
food imports.
The Development and Budget Coordinating
Committee forecast the peso to range from 42 to 45 to a dollar this
year.
At the Philippine Stock Exchange, share prices
closed lower Friday on persistent concerns about the US economy and
rising domestic inflation, which could prompt the BSP to lift
interest rates, dealers said.
The composite index gave up 24.81 points to
2,915.67.
-- With AFP
|
