MANILA-Finance Secretary Margarito Teves has attributed the strong peso value in the market to the additional money sent by overseas Filipino workers (OFWs) to their families who were affected by typhoon Milenyo.
The peso finished at 49.88 to the dollar, its strongest for the day and best since May 23, 2000 when it hit 49.84.
Market dealers said strong remittances
from abroad and the government’s improving fiscal performance help the peso’s
appreciation. The peso sustained its rally for a fourth straight session
despite a two-day trading suspension last week due to typhoon Milenyo and the
massive power outage that hit Manila and other
parts of the main island
of Luzon.
“The usual remittance story is behind
this continued appreciation, along with the improvement in the government’s
fiscal position and the Philippines’
balance of payments,” said Philip Wee, a currency strategist at DBS Bank in Singapore.
“We have entered the fourth quarter and
remittances are typically stronger during this time of the year,” he added.
Teves though had no data to back up his statement saying it is just based
on intuition.
He said the impact of typhoon Milenyo
would be in the economic activity in Luzon,
particularly in the Bicol Region but there are also “pambawi (alternatives)” in
the next few weeks.
Teves said these “pambawi” include
developments in the external sector, more exports, and higher revenues.
He said other factors to the peso’s
improvement include rising exports, increased investments, improvements in the
price of oil, the US
decision to raise interest rates, and perhaps even a shift in the investments
bound for Thailand to the Philippines.
The investments from Thailand are
usually short-term such as in the stock market and there is still no clear
indication that it would lead to foreign direct investments, he added.
The Finance chief said a better
indication can be expected in the next few days when the stock market has
recovered from the effects of the typhoon.
“The central bank made its presence to
control the appreciation of the currency, as well as to beef up its reserves,”
a Makati-based trader said. The trader said the central bank was seeking to
keep the peso’s rise at 10 centavos a day as a 30-40 centavo appreciation was
seen as too steep. “What the central bank wants is a stable currency so it will
try to smoothen out the volatility,” the trader said. Bangko Sentral Gov.
Amando Tetangco said the peso was not as volatile as other currencies. “The peso
volatility is in the middle of the range of the volatility of regional
currencies,” Tetangco said. Traders said remittances provided the key support
for the peso while demand was weak.
“The biggest bulk came from remittances
sent for tuition fees,” said Jonas Ravelas, market strategist at Banco de
Oro Universal Bank.
“The positive market sentiment combined
with a weaker dollar against the major currencies boosted the peso,” he said.
Traders said fiscal developments have allowed the currency to sail ahead even
when the dollar rose against other currencies Monday.
Traders said the peso is likely to
further rise as it enters the last quarter, the time when remittances are at
their peak due to increased spending for the holiday season. “There’s
some more room for it to go up to 49.80. But we’re near the inflection point of
50. Investors will take an opportunity to buy dollars so there might be a
correction,” Ravelas said.
The pullback is 50.25-50.20, Ravelas
said. Since January, the currency has gained nearly 6 percent, the third
best-performing in the region after the Thai baht and the Indonesian rupiah,
which have risen by 8.4 percent and 6.4 percent, respectively.
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