Peso hits 4-year high on reports of 3rd stimulus from US Federal Reserve

9:38 pm | Monday, September 10th, 2012

AFP FILE PHOTO

MANILA, Philippines—The peso inched up to a new four-year high on Monday as market expectation of a third round of “quantitative easing” by the US Federal Reserve boosted appetite for emerging-market securities.

The local currency closed at 41.615 against the US dollar, up by 6.5 centavos from Friday’s finish of 41.68:$1.

Intraday high hit 41.54:$1, while intraday low settled at 41.62:$1. Volume of trade amounted to $804.5 million from $883.46 million previously.

Traders said the appreciation of the peso was triggered by the expectation of the market that the US Federal Reserve would implement a third round of stimulus, called QE3 (third quantitative easing), to boost the still lackluster performance of the US economy.

Quantitative easing is done by the US Fed’s buying of bonds to infuse money into the US economy.

Although infusion of funds by the US Fed is meant to boost growth of the United States, fund owners believe that portions of the liquidity could spill over to emerging markets like the Philippines. In particular, recipients of the cash from the US Fed may use it to buy emerging-market assets.

Given this backdrop, fund owners see another round of stimulus raising demand for emerging market assets, thus causing appreciation of emerging market currencies.

Wanting to take advantage of the income potential from an expected appreciation of emerging market currencies, fund owners actually buy securities denominated in these currencies. As a result, currencies indeed appreciate.

The rise of the peso against the US dollar on Monday came with the appreciation of other Asian currencies against the greenback.

“The appreciation today was due to the stimulus bets on the US dollar,” Jonathan Ravelas, market strategist for Banco de Oro, told the Philippine Daily Inquirer.

Ravelas said the peso would likely hover between 41.6 and 41.8 against the US dollar in the coming days until the US Fed’s announcement of a QE3.

Speculation that the US Fed may implement another round of stimulus measure came following the release of a report that US payroll increased in August by 96,000, which was below most forecasts.

Unfavorable employment situation in the United States is one of the factors supporting the view that the US Fed may eventually be forced to implement QE3.

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Short URL: http://business.inquirer.net/?p=81368

Tags: currency , Finance , Foreign Exchange , Philippine peso , US dollar

http://pulse.yahoo.com/_2WTTL6FMGU4D7YZQNHAXBVO2DU Betz Chui

Indias GDP growth rates since 2005 to date averages 7 percent, while Philippines average since 2005 to date is just around or even less than 3 percent…. the same with growth in foreign investments and exports and other economic indicators. Indian rupee is today at 56 to the dollar, while it is 42 to the dollar for the peso! There is NO good reason for the peso to be at 42 – somebody, somewhere is profiting out of this – and the OFWs, exporters, BPOs, etc are the losers.
http://pulse.yahoo.com/_2WTTL6FMGU4D7YZQNHAXBVO2DU Betz Chui

With the Philippines very anemic GDP compared to India for the past decade, it has strengthen its currency
value against major currencies particularly the US dollars – I DO NOT
KNOW WHY. Similarly, strong exports should also strengthen a countrys’
currency – but in comparison with India; Philippines growth in exports
is dismal!! Something is very wrong in this picture!

How much money is lost from OFWs?

If we assume the value of Peso to be at par with Indian Rupee, i.e. the
peso should be around 56 – then each dollar sent home is losing 14 pesos
at current exchange rate of 42 pesos to the dollar – this means than
the total remittances of 25 billion dollars multiplied by 14 = 350
billion pesos – is the total amount lost annually from the pockets of
OFWs.

The Indian overseas workers are getting a fare value of the money they
send to India – but the Filipino OFWs sending money to the Philippines
are short changed!

This is very sad.
http://karmaeconomics.blogspot.com/ lavista4u

What kind of crappy logic is this…The more your currency gets stronger, the more powerful a country becomes…Export, quality of life, inflation, cost of living is not at all related to strengthening of Peso, if that was the case, then Zimbabwe and other African countries with the weakest currency would be super powers by now.

Once, Peso goes below 30 Mark, Standard of Living of all Filipinos will improve, like what happened in Malaysia and Singapore. US just prints money and raises the inflation all over the world. US dollar is nothing but printing press money and you want Peso to be weaker to US dollars which is already weak. That is inviting doom.

Once the Peso becomes strong, The immediate impact would be cheaper gas prices, which will immediately lower the prices of foods and other essential commodities. All countries in TOP 10 HDI list have stronger currencies, All developed countries have stronger currencies.

Its a good thing Peso is on its way to become a stronger currency.
brentcom

yehey!!!!! uwian na ang mga OFW!!!!!!! kasi malakas na ang piso…. pweh!!!! ang gagaling nilang magpredict kung magkano palitan within the next few days. manipulation lang yan ng mga pathetic and greedy people.
http://pulse.yahoo.com/_AYITA5V33GYZSLC3G37UCVNTKA Ben

PNoy government should not allow strong peso when its industrial base is not strong enough to absorb the losses of higher currency. We need to dump more dollars in the market for funding PPP and other growth inducing projects. Cheap loans can use up more funds out of the BSP vault and lessen the pressure on the peso….
Hayek SaMaynila

We
should say “Good Bye!” to the chances of an Investment grade rating for
the PHL in the next 18 months. By allowing USD/PHP to get closer to
41.50, the BSP is punishing Overseas Filipinos and BPOs, Exporters and
PHL based manufacturers, the same heroes behind the rating upgrades by
S&P, Moody’s and Fitch.

Year-to-date, USD wages of workers in India and Indonesia have become 11% cheaper than
wages of Filipinos. Banks could suffer from losses and sizeable bad
loans as many Overseas Filipinos will find it difficult to pay for their
mortgages, now that they are earning less in PHP.

Investors in the BPO
business will have second thoughts about expanding as wages in the PHL
become expensive by double-digits against regional counterparts. This
can also weaken the local property sector.

BSP
is allowing local farmer and manufacturers that compete with
cheap imports to lose their livelihood. Instead of making the peso weaker, it is adding to the
pain of lower tariffs as the zero tariff policy in ASEAN 2015
approaches by allowing too much PHP gains.

The
BSP said in the past that they say they will ensure we are
middle-of-the pack in terms of currency performance. In contrast, the
PHP is strongest currency against the USD so far this year.

The
return of PHL reform and growth momentum (high competitiveness and credit ratings, improving budget for infra and social services) will all be squandered if the
BSP does nothing to stop this speculation in the local currency market.
http://profile.yahoo.com/ZHTJJKL4HIMRZQAXMW5TTTV7XU Anti

BAGSAK NA USA BAGSAK NA… NGAYON NA…..

Peso hits 4-year high on reports of 3rd stimulus from US Federal Reserve

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