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Saturday, February 08, 2003
Weakening of peso only temporary: Palace
By She Caguimbal-Torres
MANILA -- The Philippine peso dropped and reached its lowest point at P54.10 during midday trading but recovered late on Friday after the Bangko Sentral ng Pilipinas (BSP) warned of a crackdown against suspected dollar hoarding.
Malacaņang also assured that the continued weakening of the peso will be "temporary" and could be arrested by the BSP when necessary.
The peso trading closed at 53.94 to the greenback -- up four centavos from Thursday's close -- having slipped to a two-year low of 54.10 in early trade Friday.
Presidential Spokesman Bunye stressed "the peso continues to be supported by good economic fundamentals which are the same factors that kept it very stable last year. Our reserves are at a comfortable level, which can cover any expected demand for dollars. If at all, the current weakness of the peso is temporary."
Friday's intra-day low was the peso's weakest since January 19, 2001 when it dropped to 54.40.
Dealers said the central bank sold dollars at 54.10.
The central bank also issued a strongly-worded warning Friday after noting what it said was an "unusual demand for foreign exchange, caused possibly by concerns over continuing tension in the Middle East."
It ordered foreign currency traders to "ensure strict compliance with the circulars requiring full documentary support for sales of foreign exchange."
Acting governor Alberto Reyes said that from Friday, central bank examiners would be reviewing the banks' day-to-day foreign exchange sales to ensure they complied with central bank rules.
Violators would be hit with fines and other penalties, he added.
"The (Central Bank of the Philippines) assures us that it is prepared to take the necessary steps to maintain the stability of the peso," Bunye said.
"We still see strong pressure on the peso because of the same issues -- a war in the Middle East and domestic concerns like the budget deficit and political issues," a dealer with a local bank said.
"It's panic buying and even with the central bank's intervention yesterday, there's heavy demand for dollars before close," the dealer added.
Traders had been waiting for the rate to breach P54 after it broke P53.80 a week ago. Central Bank's support for the peso has kept the rate more or less steady at P53.90 this week.
Analysts expect only temporary resistance at 54 per dollar and once reached, the peso can go around 54.50-54.70 per dollar.
The peso had lagged behind the Thai baht, with the baht rate expected to hit 42.84, giving local exporters the advantage of moving relatively cheaper goods.
Dirty-money law
Dealers said adding pressure to the peso are concerns Congress will not be able to pass amendments to the Anti-Money Laundering Law before the February 12 deadline set by the Paris-based Financial Action Task Force (FATF).
The anti-money laundering coalition of wealthy countries wants Manila to allow Filipino banking regulators to inspect deposit accounts, regardless of the amount they contained and without a court order.
The law only allowed the examination of transactions amounting to more than four million pesos. It also requires probers to obtain a court order before opening bank accounts.
The passage of the law's revisions have been pending in the senate after debates on the threshold level of bank accounts that can be opened for scrutiny in relation to the Anti-Money Laundering Law (AMLA).
In a meeting Friday with six administration senators, the President expressed her extreme disappointment over the outcome of the AMLA amendment deliberations, particularly on the threshold level of bank accounts.
Present in the said meeting were Senators Juan Flavier, Franklin Drilon, Loren Legarda, Robert Barbers, Ramon Magsaysay, Jr., and Robert Jaworski.
Senators against the P500,000 threshold level foiled the FATF-espoused amendment by pushing it up to P2 million. This prompted Senator Ramono Magsaysay, Jr., prime proponent of the amendments, to accuse some of his colleagues as traitors.
Like Magsaysay, Flavier said the President was "very" disappointed that the P500,000 level was not approved and the amendments might not make the February 12 deadline.
He said the President has asked the six senators to try and beat the deadline next week, at the same time get the P500,000 threshold level approved.
Flavier said they still have one shot at bringing the threshold level down to at least P750,000, an acceptable level to the FATF, at the Bicameral Committee Conference.
Meanwhile, opposition Senator Aquilino Pimentel criticized BSP Gov. Rafael Buenaventura and Finance Secretary Jose Isidro Camacho for raising false alarm on the overseas Filipino workers' remittances being affected if the amendments FTAF is pushing would not be passed on time.
"To date, there is no clear answer how OFWs remitting an average of $400 a month will be prejudiced if the AMLA is not amended on or before February 12," Pimentel said.
He said the international banks only scrutinize financial transactions going beyond $10,000. (With Joshua Dancel) |
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