The peso-US dollar rate has breached the psychological barrier of P41:$1 to reach a level not seen since February 2008, with the local currency's appreciation eating into the buying power of the overseas Filipino worker's beneficiaries back home.
At the Philippine Dealing System, the local currency firmed up to 40.87 against the greenback, from Monday's close at 41. The peso-dollar pair traded between 40.85-41, with total trades rising to $899.515 million from the previous day's $655.094 million.
A trader said the peso-dollar pair tested the P40.80:$1 level on Tuesday in the wake of the Greece bailout deal forged between European finance ministers and the International Monetary Fund early Tuesday.
Metrobank said the Bangko Sentral ng Pilipinas was in the market, providing strong support for the greenback, with the peso-dollar pair trading within a two-centavo range for most of the day.
Other traders said the peso could strengthen to as high as P38.50:$1 in one or two months as foreign capital flows into the Philippines unabated. This is several centavos shy of the P37.84:$1 record seen in May 1999.
“It looks possible that the appreciating trend will continue. The currency market could be vulnerable in one to two months,” Jonas Ravela, market strategist at Banco de Oro said.
Data from the BSP showed that the average OFW sends home $300 a month.
With the exchange rate averaging P41.149:$1 - or down from P43.619:$1 at the start of the year - the P13,085.7 equivalent in January likewise has gone down to P12,344.7 in recent weeks, or an erosion in the order of P741.
In an email, BSP Governor Amando M. Tetangco Jr. admitted the peso has appreciated faster than the Thai baht or the Indonesia rupiah, but said the 6 percent volatility rate for the local currency “has been maintained at the middle of the range.”
“There are several factors that have caused the peso appreciation, including the seasonal remittances and positive news out of the EU on the Greek deal. We remain watchful of market conduct,” he said.
source: interaksyon.com
