Wednesday, 7 April 2010

Peso breaks into ‘44’ territory

Erik de la Cruz
Business Mirror

THE peso jumped into the 44-per-US dollar territory on Tuesday, hitting its strongest in nearly 20 months, as funds continued flowing into Asian markets amid growing optimism about economic- growth prospects in the region.

Investor interest in Asian currencies was further lifted after the Reserve Bank of Australia lifted interest rates by 25 basis points on Tuesday, and by upbeat data suggesting the US recovery from recession was intact, traders said.

The Philippine unit rose 0.2 percent to 44.93 against the dollar, from Monday’s close of 45.01. It hit a high of 44.82 early in the session.

A total $1.026 billion changed hands on the electronic trading platform of the Philippine Dealing & Exchange Corp., 29 percent higher compared with the previous session’s volume of $796.29 million.

Traders said the Bangko Sentral ng Pilipinas was rumored buying dollars from the market on Tuesday to slow the peso’s rise. The central bank was recently seen intervening with substantial dollar purchases.

“I think the peso appreciation trend will continue given the improving Philippine economic fundamentals and the onset of the remittance season,” said Marcelo Ayes, senior vice president and head of the financial-markets group at Rizal Commercial Banking Corp.

Overseas Filipinos are expected to send home more money for the expenses of their children before schools open in June.

“The peso is supported by inflows,” he said.

Investor appetite for risky but high-yielding assets in Asia continued to rise, with sentiment lifted by Friday’s upbeat US employment figures and better-than-expected data on services and home sales released on Monday.

Jose Arnulfo Veloso, head of treasury at HSBC Philippines, said Asian currencies were further boosted by the rate-hike move of Australia.

The rate hike, analysts said, suggested that economic growth in the region was gaining momentum. Other central banks in Asia have also lifted interest rates this year, including those of Malaysia and India.

DBS Bank of Singapore said the upward surge in industrial output in Asia that has been underway for more than a year now shows absolutely no sign of letting up.

The rest of the world is recovering and that adds some gas to Asia’s fire, both in terms of fundamental demand and improving confidence, DBS, Southeast Asia’s largest bank, said in a note.

“The market may test 44.70. If that is breached, the next key level is 44.50,î Ayes said. We see the peso hitting a high of 43.75 by May.

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