Peso closes at new 6-year high

By Des Ferriols
The Philippine Star 04/21/2007

The peso stayed yesterday at six-year highs against the dollar as monetary officials said they are taking moves to mop up liquidity while keeping key interest rates steady.

At yesterday’s trading at the Philippine Dealing System (PDS), the peso traded between 47.510 and 47.650 against the dollar. By the end of the day, the peso closed at its intra-day high of 47.51 to the dollar with total turnover hitting $689.50 million.

Dealers said the strength of the peso was due in part to the steady surge of remittances from overseas Filipino workers (OFWs).

On the other hand, the market was also mildly relieved that it could at least glean some direction from the moves of the BSP when it decided to mop up liquidity to curb possible inflationary pressures from the rapid growth in domestic money supply.

As a result, the impact of market reaction on the peso was muted since the BSP kept its policy settings unchanged.

For his part, BSP Deputy Governor Diwa Guinigundo said the central bank did not expect the Monetary Board (MB)’s decisions to have a prolonged impact on the foreign exchange rate.

"There will be some initial reaction but it really shouldn’t affect the exchange rate so much," Guinigundo said.

Over the horizon, however, the currency market was also looking at the coming elections which normally creates some uncertainty in the market. Only this time, dealers said the campaign process appeared to be proceeding in an orderly fashion.

 

http://www.philstar.com/philstar/NEWS200704210702.htm