PHILIPPINE NEWS SERVICE — THE peso hit a new six-year high against the dollar yesterday, breaking 48 on the back of rising remittances from Filipino workers abroad that piled up over the long holiday break, analysts said.
The local currency opened at 48, stronger than Wednesday’s close of 48.05, and closed near its high of 47.95.
“The peso broke the 48 level as market players expected strong US dollar selling interest and heavy remittances,” Bangko Sentral Gov. Amando Tetangco Jr. said in a text message.
“Significant inflows into bonds and equities also supported the peso,” he added. Indeed, the central bank yesterday reported a 51-percent increase in net foreign direct investments, to $357 million in January from $237 million a year ago.
The peso would continue rising against the dollar through May provided remittances continued to pour in and the elections proved relatively peaceful, said HSBC Philippines treasurer Jose Arnulfo Veloso.
He said the easing of foreign exchange regulations was helping the local currency because investors were more supportive of liberalizing regimes.
Volume turnover rose to $838.6 million, double Wednesday’s $419.26-million total. The peso hit a high of 48.025, a low of 47.94, and averaged at 47.984 against the dollar.
“Given better fundamentals for the Philippines and its current attractiveness to foreign investors, I think the peso’s strength can be sustained,” said Sergio Edeza, executive vice president of Rizal Commercial Banking Corp. and a former national treasurer.
RCBC vice president Marcelo Ayes said he expected the peso to strengthen to 47.75 to 47.50 on the back of strong remittances and the lack of corporate demand for the dollar.
Banco de Oro chief market strategist Jonathan Ravelas said dollars piled up during last week’s five-day holiday, and that precipitated the peso’s appreciation. He said the peso was close to bottoming out, but might still hit 47.50 before it corrected in the medium term.
In a statement, the central bank said the bulk of the foreign direct investments in January came mainly from banks’ reinvested earnings, which reached $220 million compared with $2 million in January 2006.
It said the money went to manufacturing, services, real estate, financial intermediation and construction, and that the bulk of it came from the United States and Japan.
It said it expected foreign direct investments to remain positive this year as investors took advantage of the country’s improving investment climate.