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Sunday, January 25, 2004
Plummeting peso blamed on speculators
MANILA -- Malacaņang on Saturday said the peso's plunge on Friday's trading was the handiwork of speculators who will be badly burned in the end once the peso recovers against the greenback.
The peso fell to an all-time low of P55.75 on Friday and closed at P55.729, which is second lowest only to P55.73, which was recorded last Nov. 28.
Presidential Spokesman Ignacio Bunye said the plummeting of the peso could be attributed to speculation and traders' political perception to recent political developments.
"Pero mas malakas dito ang spekulasyon (But it's more on speculation)," Bunye said.
The peso plunged to P55.75 against the US dollar at a time the Commission on Elections (Comelec) ruled to dismiss the disqualification petition against movie actor Fernando Poe Jr.
The Comelec found no strong basis to disqualify Poe from the presidential race based on evidences presented by petitioner Victorino Fornier.
To recall, the peso also fell to P55.73 against the US dollar on Nov. 28, two days after Poe announced his bid for the presidency.
Traders said the market is jittery over recent political developments, from the Supreme Court's ruling on Comelec's automation program to Poe's disqualification case.
Recover soon
Malacaņang is optimistic that the peso plunge is just artificial and is not a cause of major concern for traders.
Bunye said the peso is bound to recover soon because the country's macroeconomic condition is sound and "we are really fundamentally and economically strong."
"The ups and downs of the peso are driven in part by the day-to-day speculations and vagaries affecting the political situation," he said.
"Speculators should not take advantage of the situation because they might just regret that later on," he said.
"Our macroeconomic stability is firm and our political stability is unsullied. Currency speculators must not ride on transient public anxieties," he pointed out.
Central Bank officials, on the other hand, said the peso's weakness was more on the month-end corporate demand. An unnamed power company reportedly bought up a large amount of dollars for its own requirements.
Traders said orders from corporations started coming in after the peso breached the P55.70 level, as they sought to cover their requirements ahead of the weekend.
Market analysts expect the peso to trade between P55.80 and P55.90, but not breaching the P56 level. The Central Bank will most likely resist and intervene.
Central Bank assured of enough dollar reserves to prop up the peso in the market. The dollar remittances from Overseas Filipino Workers are expected to boost dollar supply in the market and help the peso to recover. ST
(January 25, 2004 issue)
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