Peso ‘relatively stable’ against dollar

MANILA, Philippines—The peso has been relatively stable so far this year compared with currencies of other emerging markets, despite a slowdown in capital inflows from advanced economies, according to the Bangko Sentral ng Pilipinas.

Since the start of the year, the peso has appreciated against the US dollar by 0.41 percent, trading at 43.66 as of last Friday.

At the same time, volatility of the peso, or the difference from the average during a given period, stood at 0.96 percent.

“Recently there has been a slowdown in the inflow of capital, but this is likely to be temporary given the prospects for growth in the Asian region and other emerging markets, and the renewed uncertainty about the recovery in major industrialized countries,” BSP Governor Amando Tetangco Jr. said in an interview. “If these advanced economies, particularly the United States, adopt further measures to boost their economies, this can lead to emerging market currencies becoming more attractive.”

Tetangco explained that if there was a further easing of monetary policy in the United States, more cash could be released into the global financial system, much of which could go to emerging markets.

BSP data showed that the peso’s year-to-date appreciation of 5.1 percent was “mid-range” compared with those of other regional currencies.

Others that rose against the dollar were the Indonesian rupiah (4.45 percent), Singapore dollar (4.31 percent), Chinese yuan (2.08 percent), Malaysian ringgit (1.23 percent), and New Taiwan dollar (0.16 percent).

On the other hand, the Indian rupee weakened by 0.6 percent, the Thai baht 1.44 percent and the South Korean won 4.44 percent.

Singapore-based DBS Bank also expects the peso to continue strengthening in the third quarter, and may trade at 42.60 against the dollar by the end of period.

In its latest quarterly report on Asian markets, DBS Bank said that the peso “should be stronger based on its strong international liquidity position.”

“The persistent surge in foreign reserves to [record levels] reflects a healthy balance of payments underpinned by current account surpluses and capital inflows,” the 152-page report said.

“More importantly, foreign reserves overtook external debt in April 2010,” DBS said, adding that the gap between reserves and debt has been widening since then.