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Wednesday, October 04, 2006
Finance chief: overseas remittances help strengthen peso
MANILA -- Finance Secretary Margarito Teves on Tuesday attributed the strong peso value in the market to the additional money sent by overseas Filipino workers (OFWs) to their families who were affected by typhoon Milenyo.
The peso finished at 49.88 to the dollar, its strongest for the day and best since May 23, 2000 when it hit 49.84.
Market dealers said strong remittances from abroad and the government's improving fiscal performance help the peso's appreciation.
The peso sustained its rally for a fourth straight session despite a two-day trading suspension last week due to typhoon Milenyo and the massive power outage that hit Manila and other parts of the main island of Luzon.
"The usual remittance story is behind this continued appreciation, along with the improvement in the government's fiscal position and the Philippines' balance of payments," said Philip Wee, a currency strategist at DBS Bank in Singapore.
"We have entered the fourth quarter and remittances are typically stronger during this time of the year," he added.
Teves though had no data to back up his statement saying it is just based on intuition.
He said the impact of typhoon Milenyo would be in the economic activity in Luzon, particularly in the Bicol Region but there are also "pambawi (alternatives)" in the next few weeks.
Teves said these "pambawi" include developments in the external sector, more exports, and higher revenues.
He said other factors to the peso's improvement include rising exports, increased investments, improvements in the price of oil, the US decision to raise interest rates, and perhaps even a shift in the investments bound for Thailand to the Philippines.
The investments from Thailand are usually short-term such as in the stock market and there is still no clear indication that it would lead to foreign direct investments, he added.
The Finance chief said a better indication can be expected in the next few days when the stock market has recovered from the effects of the typhoon.
He further said investors also have to gauge the new government of Thailand before deciding whether to go back.
Teves said the country's economic outlook remains favorable and would probably lead to a growth of 5.5 to 5.7 percent.
The government will review in November whether to cut its P125 billion budget deficit target for 2006 after recording surpluses in recent months.
Press Secretary Ignacio Bunye, who returned to the country after almost a month abroad, said the peso is strengthening because of the "overall discipline and spirit of enterprise of the Filipino."
He said government will ensure the flow down of macroeconomic gains to every family that has a role on building up the economic foundations of the country. (JMR/Sunnex)
(October 4, 2006 issue)
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