Peso rises to highest level in 4 years

9:44 pm | Tuesday, July 3rd, 2012

MANILA, Philippines—The peso strengthened further to its highest level in about four years, ending Tuesday’s trading day in the 41-to-a-dollar territory.

Traders said the appreciation of the peso, which moved together with other key Asian currencies, came following reports the central banks of China and the European Union may implement measures to stimulate their respective economies.

Such a move would benefit emerging markets, including the Philippines, which have China and the eurozone as two of their biggest export markets.

The peso closed at 41.72 against the US dollar on Tuesday, up by 30 centavos from Monday’s finish of 42.02:$1.

The latest close was the highest in about four years. The last time the peso closed stronger than 41.72:$1 was on April 3, 2008, when it finished at 41.64 against the greenback.

Intraday high on Tuesday hit 41.71:$1, while intraday low settled at 41.94:$1. Volume of trade amounted to $1.2 billion from $883.65 million previously.

The central banks of China and European Union were reported to be considering the implementation of stimulus measures to boost economic growth. Traders said the reports helped improve the outlook of fund owners on the global economy’s performance for the short term.

Consequently, traders said, their appetite for emerging-market assets, such as peso-denominated stocks and bonds, improved.

Meanwhile, the Bangko Sentral ng Pilipinas said the appreciation of the peso was not solely an influence of external factors but by the favorable economic indicators for the Philippines as well.

“The Philippines is a recipient of flows of late due to the recent rise in investor risk appetite and underlying strength of our domestic growth prospects,” BSP Governor Amando Tetangco Jr. told reporters.

The Philippine economy grew by 6.4 percent in the first quarter from a year ago. This was the second-fastest growth rate in Asia during the period following China’s 8.1 percent.

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Tags: Business , business and finance , China , currencies , economy , European Union , Foreign Exchange , Philippine peso , stimulus measures , US dollar

http://www.facebook.com/people/Betz-Chui/100002310507085 Betz Chui

IMO, the government should really do something to control these rates
and not just let the market decide. This is not good for the economy.
Our OFWs and their families (they are millions and comprises almost 12%
of our workforce – and provides purchasing power to 20% more of the
population in the country or approximately 32 million Filipinos) are
losing purchasing power, in fact they have lost close to 30% purchasing
power since 2005 as it is the rate of Peso devaluation against the
dollar.

Another is our manufacturers and exporters, literally since they are
earning in dollars, have lost similar percentage in income as well since
2005.
Jianne Garcia

Iba talaga pag hindi corrupt ang presidente!! Mabuhay ang Pilipinas!!!
TagaMlang

“Such a move would benefit emerging markets, including the Philippines, which have China and the eurozone as two of their biggest export markets.” THIS IS NOT TRUE.

If the Peso will continue to appreciate, the Phil. will not benefit because our export products will become uncompetitive.

This has more adverse effects to the economy than good as claimed by the unthinking government bureaucrats. Take for example the news about the possibility of OFW’s defaulting on their housing amortization because they can no longer afford to pay. Reason, the Peso value of their US Dollar remittance have contracted.

The rising Peso will also discourage tourists from coming to the Phils. This is counter to the program of the Dept of Tourism.

I have always been consistent in opposing the rise of the Peso. I am advocating a fixed rate regime, and I feel that the Peso should be pegged at P45/$1.

If we want to see a significant improvement in the Philippine economy, one essential aspect that the government should do is take an effort (real, effective, honest effort) to control the rise of the Peso.
eirons1043

mukhang binobola tayo ng BSP tungkol sa up and down ng dollar kasi manipulated nila iyan at diyan kumikita ang mga bossing at tsokaran nila. malinaw pa sa 20-20 vision na sangkatutak na remittance ang pumapasok dito at ang lumalabas naman eh iyong konting gamit ng mga walang pakinabang na ilang exporter eh bakit hangang ngayon eh nasa 42 to 1 pa rin. Nuong panahon ni FVR ang dollar reserve natin eh nasa $20 million lang pero ang exchange rate eh 37 to 1 bakit ngayon nasa billion na eh $42 to 1 parin paki explain nga tetangco.

delicacy 08

Sir aware ka ba sa currency devaluation na isa sa mga requirements ng IMF para makapg loan ka? kung hindi try to check muna nung 1998 asian financial crisis kung bakit, kaya nga nawalan ng credibility ang IMF dahil dito eh
dragon27

There are other factors. In our side, local exporters and OFWs who remit money are the first to react and cry aloud to the government whenever the peso gets stronger against the dollar.

A strong peso is more negative than positive for most, particularly those in the export sector and for OFWs. China’s currency is kept low by the Chinese government due to their export dependent economy. It makes their produce cheaper relative to those made in developed countries importing their products.

dprotector

This could be bad for exports and OFWs remitting their money to the Philippines. Noynoy should spend more in energy development to prevent future brownout and also in housing to balance the peso.
jose_rizal11

God Bless the Philippines!!! Ariba ariba!!!
Ilonggobyblood

Good news for our country! Mabuhay ang Pilipinas! May pag-asa na tayo! This is the time to go hard to the future, Maraming Salamat Mahal na Pangulo!
http://www.facebook.com/people/Franzeline-Perdubal/100002708434971 Franzeline Perdubal

We are the “recovering man of Asia”, goodbye “sick old days”.
Mang Teban

Hmmm….Could it be that, when Bangko Sentral ng Pilipinas announced plans to lend $1 billion to the European Union only last week, the Forex market got excited?

INQ_reader

Huh? Extending a dollar-denominated loan means dollars will leave our shores. This should put pressure against the peso, unlike what’s happening now.

Mang Teban

@INQ_reader:disqus

Foreign currency trading never sleeps and the rates of currencies traded against each other move up and down every minute, hour or even in seconds. Trading is worldwide and when it is bedtime here in our country, it is regular office hours on the other side of the globe.
The loan that will be extended by the Central Bank has nothing to do with forex rates, technically speaking, because it will come from our reserves. When we lend in US dollars, we get it back in the same currency plus interest. On the other hand, forex trade rates are affected by supply and demand mechanisms in the open market.
Handiong

The $1 billion loan to the IMF still remains an asset. It’s still part of our reserves. We just shift it from US treasury-bill (which is really a loan to the US Government) to a loan to the IMF.

Managed funds continue to flow into the local stock market. All indices were up when the stock market closed today. All the stocks in my personal portfolio ended higher today. More and more dollars are being converted to pesos (you settle stock trades in pesos) and the law of supply and demand is driving the peso up.
INQ_reader

Huh? If you extend a loan to somebody, can you still use the money for something else? NO!
Handiong

But the money is not meant to be spent. Reserve nga, eh. And as Mang Teban has explained, the foreign exchange rate is determined by buying and selling dollars for pesos or pesos for dollars, not by lending your money or not. Do you really know what you are talking about?
INQ_reader

You’re probably right. I don’t understand how money taken from Philippine reserves, that is loaned out to other countries, could still be used.

Peso rises to highest level in 4 years

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