Peso to remain steady below 45 to dollar—report
MANILA, Philippines—The peso will continue to trade below 45 to the dollar in the second quarter of 2011 as monetary authorities try to offset hikes in oil and food prices with a stronger currency, according to a local investment research group.
In its latest report on the domestic economy, First Metro Investment Corp. and UA&P Capital Markets Research (CMR) said the peso “will have an appreciation bias starting March.”
Referring to the widespread turmoil in North Africa and the Middle East, the CMR report stated that, “unlike in the past, the US dollar does not seem to be the favored ‘safe haven’ in the ongoing … crisis.”
CMR forecasts that the exchange rate will settle at 44.98 in May from 44.05 in March.
The report added that remittances from overseas Filipinos would continue to register a double-digit figure in the first quarter.
The government has started to monitor commodity prices closely, keeping an eye out for any sharp movements as commodity prices increase worldwide in part due to the so-called Middle East and North Africa (Mena) crisis.
In a report that appeared in the February issue of “Market Call,” the University of Asia and the Pacific (UA&P)said that the Philippines faces inflationary pressures over the next six months from higher oil and food prices, due to the “widening” crisis in North Africa and the Middle east.
UA&P predicted that the country’s inflation could reach 4 percent in the second quarter and even higher in the third quarter.
Socioeconomic Planning Secretary Cayetano Paderanga told reporters that a 4-percent inflation in the second quarter would still be within the government’s full-year forecast range of 3.5 and 5.5 percent for 2011.
As such, the country need not “worry” about a possible economic slowdown, he said.
Also, the Department of Trade and Industry (DTI) has vowed to keep a tight watch on traders and retailers and prevent them from making undue increases in the prices of prime commodities amid spiralling oil prices.
Trade Undersecretary Zenaida C. Maglaya explained that the recent spikes in the prices of petroleum products should have minimal effect on the costs of basic and prime goods.
The DTI has also heightened “its market visibility to avert unscrupulous businesses from unreasonably raising prices amid the looming oil price hike,” Maglaya said.—Amy R. Remo, Riza T. Olchondra, Ronnel W. Domingo
