BIZ BUZZ: Until the peso’s next weakening . . .
In early October of last year, the Bangko Sentral ng Pilipinas (BSP) cracked the whip on what it felt were bankers who were taking advantage of the peso’s weakness to make a quick buck, especially since the local currency was threatening to head into P60:$1 territory back then.
To address this, the regulator imposed what could be considered draconian measures to dissuade foreign exchange (FX) traders from executing transactions that threatened the stability of the peso.
The unspoken fear among economic managers at that time was that a review team from a credit rating agency was in town to assess the Philippine situation, and a sharp decline in the peso to below P60 could have triggered a credit ratings downgrade—not a promising start to the second Marcos administration.
It was so bad that, as Biz Buzz had reported, BSP ordered banks to submit supporting documents within 15 minutes of their executing FX trades for all transactions above $100,000.
The central bank also sent personnel to banks’ trading rooms to literally watch over traders’ shoulders as they worked the FX markets, we’re told.
Well, what a difference three months makes.
Biz Buzz learned that the central bank has now reversed this policy, telling banks that they would no longer be breathing down FX traders’ necks as of Dec. 31, 2022.
That’s because the peso is no longer in immediate danger of weakening past the P60 mark. In fact, it’s doing relatively well against the greenback, having hit a six-month high just the other day.
“The BSP put the word out that it’s back to normal,” one bank official said. “Bahala na kami ulit (It’s all up to our discretion once more).”
It goes without saying, of course, that the central bank can easily revert to its previous tightened regulatory stance, especially since it seems to have contributed to averting more speculative attacks against the local currency.
For now, the bankers are behaving. But how long will it be before fundamental factors give them a reason to push the peso lower once more? Abangan!
—Daxim L. Lucas
Megawide’s next move
The group of business tycoon Edgar Saavedra is making moves in 2023 after recently agreeing to sell the Mactan Cebu International Airport venture to the Aboitiz family.
Saavedra, who leads Megawide Construction Corp., is looking to deploy part of that P14.4 billion windfall to other infrastructure projects and a data center business in Cavite.
The latter is a new area for Megawide, but Saavedra said they were confident of turning the venture into a success, thanks to the company’s stronger balance sheet and an international partner.
Saavedra said the project would have a capacity of 25-30 megawatts, which will serve booming demand for data amid the expansion of large technology companies, known today as hyperscalers.
The project will cost at least P5 billion and will be launched this year.
At the same time, Saavedra’s group is also plotting ambitious expansion programs for its power and unlisted real estate businesses. It’s shaping up to be a busy Year of the Rabbit for this young CEO.