BSP sees volatile peso in near term
November 26, 2003 | 12:00am
Bangko Sentral ng Pilipinas (BSP) Governor Rafael Buenaventura said yesterday the peso was likely to remain on shaky ground with political worries weighing on market sentiment in the run-up to next Mays elections.
He also said the local currency was trading too low when it hit 55.70 to the dollar on Monday, hovering dangerously close to its all-time trough of 55.75 to $1.
At the Philippine Dealing System (PDS), the peso gained three centavos to close at 55.530 from Mondays close of 55.560 to a $1.
Transaction volume amounted to $95.40 million on an average rate of 55.536 to the dollar.
The resignation of Finance Secretary Jose Isidro Camacho who won investor plaudits for his skill in negotiating overseas bond deals and capping a yawning budget deficit and the possible presidential bid of action movie star Fernando Poe Jr. are fuelling market jitters.
"The peso will remain volatile for some time," Buenaventura told reporters. "At 55.70, we think its overdone. Thats the breaking point."
Camacho announced last week he would quit his job by the end of November because he was exhausted and wanted more time with his family.
His announcement has been followed by other high-level resignations from President Arroyos Cabinet in what could be maneuvering ahead of next Mays national elections.
Other Cabinet officials, including Trade Secretary Manuel Roxas II, were also set to resign to run for a Senate seat, according to local media reports.
Buenaventura said the BSP had been ready to intervene in the currency market as the peso fell to near three-year lows on Monday, but banks and some exporters took advantage of the currencys slide to unwind long dollar positions.
The currency fell to its record low in January 2001 at the height of the impeachment trial of ousted President Joseph Estrada. Estradas allies in the opposition have been pushing popular actor Poe to stand in next Mays elections to challenge Mrs. Arroyo, who is seeking a second term.
"On the candidacy, thats part of the political noise premium (in the peso) we are paying, which is not unexpected," Buenaventura said.
He also said the local currency was trading too low when it hit 55.70 to the dollar on Monday, hovering dangerously close to its all-time trough of 55.75 to $1.
At the Philippine Dealing System (PDS), the peso gained three centavos to close at 55.530 from Mondays close of 55.560 to a $1.
Transaction volume amounted to $95.40 million on an average rate of 55.536 to the dollar.
The resignation of Finance Secretary Jose Isidro Camacho who won investor plaudits for his skill in negotiating overseas bond deals and capping a yawning budget deficit and the possible presidential bid of action movie star Fernando Poe Jr. are fuelling market jitters.
"The peso will remain volatile for some time," Buenaventura told reporters. "At 55.70, we think its overdone. Thats the breaking point."
Camacho announced last week he would quit his job by the end of November because he was exhausted and wanted more time with his family.
His announcement has been followed by other high-level resignations from President Arroyos Cabinet in what could be maneuvering ahead of next Mays national elections.
Other Cabinet officials, including Trade Secretary Manuel Roxas II, were also set to resign to run for a Senate seat, according to local media reports.
Buenaventura said the BSP had been ready to intervene in the currency market as the peso fell to near three-year lows on Monday, but banks and some exporters took advantage of the currencys slide to unwind long dollar positions.
The currency fell to its record low in January 2001 at the height of the impeachment trial of ousted President Joseph Estrada. Estradas allies in the opposition have been pushing popular actor Poe to stand in next Mays elections to challenge Mrs. Arroyo, who is seeking a second term.
"On the candidacy, thats part of the political noise premium (in the peso) we are paying, which is not unexpected," Buenaventura said.
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