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AFTER nearly breaching a new level, the peso recovered from an
almost second week-long decline Friday as investors sold the dollar
to profit from its rallies in the past several days, traders said.
A local bank trader said the peso is seen
hitting the 44 to a dollar mark, provided the Bangko Sentral ng
Pilipinas (BSP) backs off from supporting the local currency.
At the Philippine Dealing System, the peso
closed at 43.75 against the greenback, stronger than the previous
finish of 43.925, which was the lowest in seven months. Total
trading reached $627 million, higher than Thursday’s $617 million.
“It’s a correction day after a week-long
drop,” the trader said.
Metropolitan Bank and Trust Co. said the slower
than expected first quarter gross domestic product (GDP) growth and
the lower revision of last year’s growth disappointed the market.
“Dollar bulls took control of the helm with
market opening higher at 43.75, gaining momentum all the way to
43.92 with the BSP intercepting to slow the approach to the
44-handle,” Metrobank said in a note to clients. Profit taking set
in and a sell down occurred and dips were opportunities to buy back
the dollar, it added.
Next week, it sees the peso ranging from 43.30
to 44.30 against the US currency.
The bank said the peso remains an unattractive
bet with the market setting its sights to break 44. Given the drop
in the price of oil overnight, “we may see a respite from the
upward momentum but, as in past situations, dips are vulnerable to
buy backs,” it said.
“Again, expect the BSP to stall the upside.
Likewise, the peso may get support from weekend and month end
remittance flows,” it added.
The Development Bank of Singapore (DBS) said the
US dollar made a strong comeback in May, with the greenback
appreciating against all Asian currencies except for the Chinese
yuan.
“The Philippine peso did not fare well too, as
the fundamentals like improvements in fiscal finances and current
account responsible for its three-year rally from 2005 to 2007
weakened,” the Singaporean bank said.
DBS cited increased expectations for US to start
taking back rate cuts as early as the last quarter of the year, as
rising US bond yields and stable stock markets signaled that the
worst may be over for the financial crisis.
“The month also witnessed currency
interventions by many central banks to defend their currencies,
which contrasted sharply with past practices of slowing
appreciation,” it added.
At the Philippine Stock Exchange, share prices
closed 0.9 percent higher on bargain hunting and a pullback in oil
prices, dealers said.
They said investors took comfort in positive
offshore leads and the upward revision of first-quarter economic
growth in the United States, a key market for Philippine exports.
The composite index rose 25.22 points to
2,827.44 off a high of 2,835.49. The all-share index was up 0.6
percent at 1,741.79. There were 55 advancers and 29 decliners, while
50 issues were flat. Turnover was leaner at P1.6 billion compared
with P2.3 billion on Thursday.
Dealers said investors snapped up bargains after
prices hit three-week lows, although they remained hesitant to buy
aggressively a day after the Philippine government announced
disappointing economic growth figures for the first quarter.
“Clearly, higher food and energy prices are
taking a larger toll on consumers and businesses than we thought,”
said Lim Su Sian, economist at DBS.
Data released on Thursday showed Philippine
economic growth slowing to 5.2 percent in the first quarter from 6.4
percent in the previous quarter.
Recovering from Thursday’s recent falls, index
leader Philippine Long Distance Telephone Co. rose 1.0 percent to
P2,605. Manila Electric Co. rose 4.2 percent to P61.50. The stock
recovered from recent heavy losses amid an ongoing battle for
management control of the Philippines’ biggest power distributor.
San Miguel Corp.’s A shares, limited to
Filipinos, lost 6.0 percent to P39.50, while its B shares, open to
all investors, slumped 9.4 percent to P38.50.
-- Chino S. Leyco and AFP
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