Peso tumbles to 45.50:$1, weakest level in 10 months
By Doris Dumlao
Philippine Daily Inquirer
First Posted 17:54:00 07/03/2008
Filed Under: Economy, Business & Finance
MANILA, Philippines -- The peso faltered to P45.50 to the US dollar on Thursday, its weakest level in 10 months, as rising inflation across Asia's emerging markets soured investor appetite on regional currencies and other financial assets.
The local currency shed a hefty P0.30 from Wednesday's finish of P45.20 to close at its intra-day low against the greenback while global oil prices surged to a new record-high above $144.00 per barrel.
“It's the same story across the region. Everyone's playing on the inflation story,” said Jose Emmanuel Hilado, treasury dealer at Banco de Oro Unibank Inc.
He said speculative pressures were contributing to the peso's sharp depreciation in recent days.
The peso is now trading at its lowest level since closing at P45.57 to the US dollar on Sept. 19, 2007. Volume at the Philippine Dealing System fell to $568.5 million from the previous day's $608.65 million.
“But sooner or later, it (the peso) will play out,” he said, estimating the next key barrier at P45.60 against the greenback.
The Bangko Sentral ng Pilipinas (BSP), the country’s central bank, estimated that inflation broke into double-digit levels and hit a 14-year high in June. But it also expected a deceleration of the inflation rate by the fourth quarter.
“The market is anticipating what central banks in the region will do to contain inflation. They are watching BSP and other central banks to act decisively but it's not as simple as fighting inflation using interest rates,” Hilado said.
He noted that pressures on consumer prices were mostly coming from the upswing in oil prices rather than demand.
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