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Peso dips as US dollar seen to gain ground in currency war

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AFP FILE PHOTO

MANILA, Philippines—The peso fell slightly on Wednesday as global talks about a currency war is seen allowing the US dollar to gain ground.

The local currency closed at 40.655 against the US dollar, down by 2.5 centavos from the previous day’s finish of 40.63:$1.

Intraday high hit 40.60:$1, while intraday low settled at 40.67:$1.

Volume of trade reached $790.2 million from $475.9 million previously.

The rise of the peso came amid speculation that there is an ongoing currency war among several economies. Currency war is characterized by efforts of countries to deliberately weaken their currencies against the US dollar in order to boost their export sectors.

The Bangko Sentral ng Pilipinas earlier said the Philippines would not engage in the currency war, but measures implemented in other countries that would lead to the depreciation of their currencies could boost the US dollar.

Jonathan Ravelas, market strategist for Banco de Oro, said the minimal decline of the peso on Wednesday would be due more to the strengthening of the US dollar amid talks of a currency war rather than the deteriorating appetite for the peso or peso-denominated securities.

While the peso dropped against the greenback on Wednesday, the Philippine Stock Exchange Index hit a new record high of 6,648.57.

Ravelas said foreign exchange inflows have remained significant, but its impact on the exchange rate has been neutralized by the strengthening of the US dollar resulting from global economic developments.

“Flows, such as investments in the stock market, remain strong. The decline of the peso simply reflects a slowly changing trend for the dollar amid the so-called currency war,” Ravelas said.


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Tags: Business , business and finance , currencies , economy , Foreign Exchange , money market , peso-dollar exchange , Philippine peso , US dollar

  • P3tadgr8t

    There truly is no good argument for a strong peso.  I believe that the goverment of the Philippines, under the leadership of President Aquino will continue to implement sensible pro-growth policies.  I also believe that the Philippines at its present expansion rate, will one day find itself among the most developed economies in the word. 

    However, getting to that point could be a long and hard slog so long as the Banko Sentral ng Pilipinas continues to sit on the fence while far more developed countries promote policies that weaken their currencies.  There is no pride in a currency that is gaining strength nor there is pride in seing the mighty peso attain near parity to the mighty dollar.  Not while while we see our fellow countrymen continue to strugle for survival.

  • zeroko

    There never is a clear boundary of advantage and disadvantage which ever way the currency moves. Someone will get hurt. In our country, the Filipino people gets the greatest disadvantage when the value of our currency swings. On reason is that all our big businesses are now in the hands of the Chinese. Take for granted the electricity. When ever our currency appreciates, electricity defies logic and   it goes up. Yet  the electric supplier is silent on the appreciate of our currency. The increase defies logic. It goes up no matter what. But when our currency goes down, the same thing happens. The price of electricity goes up faster and higher by citing that our peso depreciated, and therefore the cost of coal went up, Coal Fired electric Generation is our dominant source of energy.  

    In short, the Filipinos are held hostage by these unscrupulous Chinese Cartels. Everything here in the Philippines is expensive because of Chinese price manipulation.There never is a fair deal in our country. Another example is the water bills. An average consumer never question, much more protest, when ever the price of water goes up. Needless to say, there was an article about Maynilad charging the consumers billions of pesos for a project that was never performed. You bet that Mr. Filipino Consumer, you paid for a project that never exist? You were charge for a Maynila project by the billions of pesos coming from you pocket, yet they did not perform the propose project, and worst, they do not like to refund the excess charges! He he he. Only in the Philippines!. It is only in the Philippines wherein   profiteer Chinese businessmen can cheat the consumers with impunity and in broad daylight. “Harap harapan na ang pambabastos ng mga Chinese businessmen to the Filipinos! And our Chinese dominated Government just step aside while the Filipino consumers are being hoodwink or cheated! Yellow monkeys!

    Where on earth would you find a giant company like Maynilad requiring it’s consumer to finance their project? Is it not suffice to say that under normal condition, the financial aspect in the expansion of ones project are finance from bank loans or other financial institutions, but never from the consumers? 

    The same is true with the MRT/LRT. The Filipino people were cheated again, without them knowing it. The Initial Finance on the MRT/LRT project came from private investors like the Ayala/s and others. Now, in the agreement, it is stipulated that the government will guarantee a fix return of investment. Now, later on in the construction, because of the cost overshot the financial investment, the private sector back out, and the government took over. These Chinese investor got back their investment yet, they receive guaranteed profit. Now, how is that? They withdraw their money from the MRT/LRT project, yet they still receives profit! This is how our dishonest Chinese government rules the Filipinos!. It just let the Filipino people get pounded and abused.

    The same thing happened in power generations. During FVR’s term, there was a mass electric brownout for an extended time. What FVR did was a quick fix. He guaranteed the investors 100% profit even if it only delivers a fraction of electricity. Say, one electric supplier deckares that he can deliver 1,000 mega watts, (but did any one in our Chinese government verified if the private supplier can actually deliver what he says? Never!), and therefore, without too much ado, the government signed the contract. With this kind of term, the Filipino people now is paying 100% to those Chinese Firms who built those Coal Fired electric generation. 

    Besides, why use Coal in the first place? Coal fired electric Generation is the most stupid thing FVR decided on. It pollutes the surrounding environment with toxic elements. Coal fuel kills the fish in the vicinity. In Batangas alone, the sea bed is littered with dead corals, barren, and the sea bed turns black because of pollution. Why? It is coal residues. Coal pollutes our rice fields, and worst it pollutes the air we breath!. I can go on and on, but in the end of the road, these would not have happened if only the Filipino people banned the Chinese from participating in our government.
     .

  • Iggy Ramirez

    A strong peso is a scourge to the economy. Thailand Baht is 31 to a dollar but the prices there are just like in the Philippines. I mean for a generic rice and course combo, it costs around TB 60 in Thailand and around PhP 64 in the Philippines. The Philippine price is still very expensive for a food that is not even half as delicious as those in Thailand. If the peso gets stronger, say, P37 to a dollar, the generic combo will still cost P 64 in the Philippines. But if foreigners bought this meal using Thailand money, it will now cost them TB 54 (they used to buy it at TB 48), which is now equivalent to roughly around P 71, if it was calculated using the value of peso at 41 to a dollar. The P64 became P71 but the salaries do not get higher and the prices continue to get higher.

    So every time the peso rises, it makes it harder for outside buyers to purchase goods from the Philippines but it makes the imported goods cheaper. Unfortunately, about 80% of the people in the Philippines are dirt poor who cannot even afford to buy garbage and ironically are working in the export sector. So, how overwhelming does the irony get when the peso rises to help the economy?

    The people who say that a strong peso is good for the economy are unaware at best or are cashing in on foreign exchange. Who is in his sound mind would say that making the peso appreciate is good while China, Japan, some countries in Europe, USA and other industrialized nations are going to great lengths to crash their currencies?

  • axe musk

    This is a good news to ALL OFWs…. Anyway Peso appreciation is NOT reflected on the prices of goods (basic) in the PHL…. Hope to see it climb to Php45 = 1USD….

    • http://profile.yahoo.com/N5BCAXQLZMMRSITXMG5JBFOAKI Jake

      That is UNTRUE!

      • http://www.facebook.com/estee.muri Estee Muri

         Bakit Jake, ikaw ba  ay namamalengke at alam mo  that the prices of commodities  really came down? I for one can not feel  the prices (basic goods) in the Philippines was affected. If ever you  have proof, sigue  kahit  man lang sa  mga palengke  try to compare the prices  before and after the Peso Appreciation.

  • boychicharon

    does bsp have the liquidity in the first place to weaken the peso. we closed weaker today because of what looks like bsp buying $100m according to one report.

  • bongarroyo

    bumagsak sisihin si PNoy…

    pag umangat bunga ng pagsusumikap noon ni gloria..LOL

    naunahan na ang mga talangka…

    • http://pulse.yahoo.com/_T4UWEQIDXLS7RQXY2DDQTV6MNE carol

      Teka, sino ang ang unang maninira dito, diba si BS aquino, siya ang leader ng mga talangka.



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