PH peso pierces back to P45:$1 level
MANILA, Philippines – The Philippine peso on Friday, October 9, gained 24 centavos and pierced the P45 to $1 level.
The Philippine peso closed at P45.87 to $1 Friday from Thursday’s P46.11 to $1. It opened at P46 to $1 and hit an intra-day high of P45.85 to $1.
The local currency gained 90 centavos this week after closing at P46.77 to $1 on October 2. This was the peso’s strongest level in two months of since it closed at P45.75 to $1 on August 10 or a day before the People's Bank of China devalued the Chinese yuan.
Volume was again heavy at P1.05 billion ($48.05 million) from Thursday’s P936.7 million ($42.88 milion).
ING Bank Manila senior economist Joey Cuyegkeng that a number of FOMC policymakers continue to warn the market of a rate hike in 2015, especially market expectations of a March 2016 rate hike.
“[The] market takes a more cautious stance after the recent significant strengthening of peso and other Asian currencies,” he said.
According to him, the peso and other currencies and Asia have been strengthening since last week as “excessive pessimism has been soothed by revised forecasts showing still moderate economic growth in 2015 and 2016 for the global economy and for Asian economies and a soft landing for the Chinese economy.”
Likewise, the International Monetary Fund (IMF) slashed the projected global economic growth this year and for next year.
Amid the delay, the impending interest rate hike in the US would continue to bring uncertainties for the global market.
“There are still risks ahead with the US Fed rate hike still expected in the next 6 months,” Cuyegkeng said.
Diwa Guinigundo, officer-in-charge of the Bangko Sentral ng Pilipinas (BSP), said strong macroeconomic fundamentals including sustained gross domestic product (GDP) growth would allow the Philippines survive the external shocks brought about by the US interest rate lift-off and the economic slowdown in China.
Guinigundo explained that the interest rate increase in the US has long been anticipated by a large segment of the global financial markets.
“Pressure for safe haven search by foreign capital would likely lead us to seeing short-run volatilities in the foreign exchange and equities markets, the bond markets would also react. Those with large external exposure would be most concerned because of foreign exchange and credit risks,” he added.
“Investors should also realize that the other side of the US Fed lift off is not as dark, as it means US growth is improving and with it, everybody is lifted up especially with respect to higher exports, services, and investments,” he concluded. – Rappler.com