Remittances prop up currency
MANILA, Philippines - The peso continued to firm up against the dollar Tuesday as strong remittance inflows offset the strengthening of the greenback.
The peso Tuesday closed at the day’s high of P48.41 per dollar, up by eight centavos compared to the previous trading day’s finish of P48.49.
A total of $895 million changed hands compared to $822 million in the previous trading day.
"Remittances are starting to come in. That supported the peso [Tuesday]," a currency trader said.
The peso opened weak at P48.62 and traded to as low as P48.89 on the strengthening of the dollar, as weak US housing data prompted offshore investors to park their funds in safe havens such as dollar assets.
But the peso recovered by the afternoon as remittances continued to flow.
"The peso will continue to find support in remittances. This will probably be the trend until the year ends," the trader said.
He added that lack of corporate demand for dollars added boost to the peso.
The trader also said the peso improved after the Bureau of the Treasury awarded in full the P6 billion worth of three-year Treasury bonds auctioned Tuesday.
The central bank was not also spotted at the buying side of the market, the trader said.
He also said the peso is likely to start recovering as market players deemed the peso at P49-per-dollar levels is already "overdone."
"The peso was at its weakest during the height of the global financial crisis, when credit default swaps (CDS) were at a high of 800 basis points. Banks are no longer looking at that range," the trader said.
Currency dealers are now looking at a test of the P48.30 to P48-per-dollar levels on the downside and P48.80-48.90 on the upside.
The opening of the peso today will also depend on the developments overseas, the trader said. — Gerard S. dela Peña, BusinessWorld
The peso Tuesday closed at the day’s high of P48.41 per dollar, up by eight centavos compared to the previous trading day’s finish of P48.49.
A total of $895 million changed hands compared to $822 million in the previous trading day.
"Remittances are starting to come in. That supported the peso [Tuesday]," a currency trader said.
The peso opened weak at P48.62 and traded to as low as P48.89 on the strengthening of the dollar, as weak US housing data prompted offshore investors to park their funds in safe havens such as dollar assets.
But the peso recovered by the afternoon as remittances continued to flow.
"The peso will continue to find support in remittances. This will probably be the trend until the year ends," the trader said.
He added that lack of corporate demand for dollars added boost to the peso.
The trader also said the peso improved after the Bureau of the Treasury awarded in full the P6 billion worth of three-year Treasury bonds auctioned Tuesday.
The central bank was not also spotted at the buying side of the market, the trader said.
He also said the peso is likely to start recovering as market players deemed the peso at P49-per-dollar levels is already "overdone."
"The peso was at its weakest during the height of the global financial crisis, when credit default swaps (CDS) were at a high of 800 basis points. Banks are no longer looking at that range," the trader said.
Currency dealers are now looking at a test of the P48.30 to P48-per-dollar levels on the downside and P48.80-48.90 on the upside.
The opening of the peso today will also depend on the developments overseas, the trader said. — Gerard S. dela Peña, BusinessWorld
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