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By Maricel E. Burgonio, Reporter
MERRILL Lynch said it expects the peso to
stabilize after its recent weakness, adding the Bangko Sentral ng
Pilipinas (BSP) would keep on raising interest rates backed up by
stronger growth in overseas Filipino worker (OFW) remittances.
“Remittances are expected to sustain their
strong trend and support the central bank’s efforts in limiting
[the] peso weakness,” the US investment bank said in its recent
foreign exchange report.
As the BSP expects inflation to exceed targets
this year and next, this should keep it in a tightening mode and
also cap foreign exchange rate upside by US dollar sales, Merrill
Lynch said.
From a low of 2.8 percent last year, the BSP
expects inflation to accelerate to between 9 percent and 11 percent
this year, before easing to 6 percent to 8 percent next year.
The peso appreciated on Thursday, closing at
46.540 to a dollar from 46.730 on Wednesday. Trading volume eased to
$821 million from $963.1 million the previous day.
Despite the expected improvement of the peso,
Merrill Lynch said market sentiment is likely to remain generally
bearish as the trade and investment outlook stays weak.
In its report, the US banking giant said markets
are disappointed with the relatively muted tightening in response to
inflation pressures.
“Central banks have been selling US dollars to
smooth the impact of the unwinding. Intervention would also have the
effect of keeping imported inflation in check,” it said.
Merril Lynch said the recent US dollar bounce
coincided with renewed Asian growth concerns.
At the Philippine Stock Exchange, share prices
closed 0.2 percent higher on Thursday as investors awaited August
inflation data, dealers said.
The composite index added 4.02 points to
2,754.05. The all-share index added 4.35 points to 1,691.83.
Decliners trumped advancers, 45 to 35, with 57
issues unchanged. Turnover reached P1.811 billion.
The market shrugged off early weakness ahead of
the release of August inflation data on Friday as investors went for
property bargains towards the close, dealers said.
“Looking at market prices, property stocks
remain attractive,” Ron Rodrigo of DBP-Daiwa Securities told Dow
Jones Newswires.
Megaworld Corp. added 1.3 percent to P1.54,
while Ayala Land Inc. ended 2.3 percent up to P11.25 and SM Prime
Holdings Inc. gained 1.2 percent to P8.30.
Philippine Long Distance Telephone Co. fell 0.4
percent to P2,770.
San Miguel Corp.’s A shares added 4.5 percent
to P46 while its B shares added 3.3 percent to P46.50.
-- With AFP
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