peso to weakest level in over a year

[Peter C 184]

PHL equities plunge drive peso to weakest level in over a year  

SIEGFRID O. ALEGADO, GMA News June 11, 2013 5:20pm

 

 

The peso fell past the 43 per dollar mark on Tuesday as foreign investors continued to withdraw fund from domestic equities and other Philippine assets amid a slew of negative local news in the face of encouraging developments in the US. 

 

The local unit shed 42 centavos to 43.2:$1 from 42.78:$1 Monday, the currency's weakest since June 8, 2012 when it closed down to 43.27:$1. 

 

Ildemarc  Bautista, research head at Metropolitan Bank & Trust Co., said Standard & Poor's change of outlook for the better on US debt—to stable from negative—added to speculations the Federal Reserve will start taper off its $80-billion bond buying program, dubbed as quantitative easing. 

 

“The consensus is that it's about talks of the US ending its quantitative easing. This results in investors giving up risky assets like peso-denominated ones and turning back to US-dollar assets,” Bautista said in a telephone interview. 

 

Speculations about the Fed unwinding stimulus have eroded the appeal of risky assets, driving investors toward safe-haven US assets and weakening Asian currencies. 

 

A trader at local bank said foreign withdrawals from the Philippine Stock Exchange (PSE) were  “intense.

 

“The depreciation of the peso was mainly driven by decline on the Philippine Stock Exchange and demand for dollars from corporates,” the trader said. 

 

In line with a general weakness in region's markets, the PSEi shed 318.95 points or 4.64 percent to close at 6,556.65. 

 

“Bad” economic data like sluggish exports and increased joblessness also spooked foreign investors away from Philippine assets, the trader noted. 

 

But Bautista said the stronger dollar sentiment is “a systemic thing and is regional if not global in nature.”

 

The trader noted that “dollar demand coming from corporations” that need to service mid-month requirements also weighed on the peso. 

 

Tacking bids ahead of the Monetary Board's policy meeting, the trader sees the peso moving within the 43.10 to 43.40 per dollar band on Thursday. 

 

Philippine markets are closed on Wednesday for the Independence Day. Trading will resume on Thursday. — VS, GMA News

 

[GoHuk 369]

Also a net outflow of FDI in March reversing recent trends.

 

http://www.tribuneonline.org/index.php/headlines/item/15251-more-foreign-capital-flows-out-in-march

Edited June 11, 2013 by GoHuk

[smokey 21,706]

wasnt there a thread about how everyone should be investing in the philippines and using a paper by a large bank as proof

[towboat72 820]

that's funny because when I was talking to my wife last night she said exchange rate was getting better

[GoHuk 369]

that's funny because when I was talking to my wife last night she said exchange rate was getting better

 

Better for whom?

[Davaoeno 37,064]

Better for whom?

 

 

I invested a large sum of money in the Phil at 48 pesos to the dollar. I am just now collecting on my investment. I would love to see a sub 40 exchange rate . 

[easy44 5,527]

I invested a large sum of money in the Phil at 48 pesos to the dollar. I am just now collecting on my investment. I would love to see a sub 40 exchange rate . 

I don't think you will get much company here in that regard.

Edited June 12, 2013 by easy44

[Knowdafish 1,772]

that's funny because when I was talking to my wife last night she said exchange rate was getting better

 

I agree!

 

http://www.oanda.com/currency/converter/

[samatm 2,967]

well look for more outflow of foreign capital as the Good Ol'  USofA  churns out favourable numbers and the Fed puts out news of  QE3 reduction.   The Piso will  be getting weaker so say some.   Trade at your own risk. 

[Knowdafish 1,772]

Historically the peso/$$ exchange rate is at its lowest during fall/winter (U.S.) when the OFW's head home and flood the Philippines with foreign currency causing a demand for pesos, and highest during the spring/summer (U.S.) when the demand is highest for $$'s. This isn't always the case as their are other influencing factors, but it is generally true. 

 

If you can time it right, it pays to have a dollar account AND a peso account and move money between them as the exchange rate peaks and bottoms. In a poor year you can easily make 5%, and a good year 10% or more. 

[GoHuk 369]

This morning I responded to an email about the stock market plummeting with the following.

 

---

 

There are signs that the honeymoon may be ending.

1. Stock market falls (not really a plummet).
2. Net outflow of FDI in March.
3. Fall in value of exports during April.
4. Value of Peso decreases slightly – Sterling @ 65 (from approx 60) and USD @ 43 (from approx 40).

OK, it’s too early to predict which way the market will go in the long term but I suspect that some of those predictions we made at the beginning of the year are happening.  The European financial market is still a mess and investors have no confidence.  The UK and USA markets however are slowly recovering and some of the hot money that was lodged in the PH will migrate there.

 

The term ‘jobless growth’ that is used to describe the PH economy is nonsense, a ridiculous oxymoron.  The PH GDP continues to show remarkable growth, but is less impressive if you discount it for the increase in population.  OFW remittances have increased (and we suspect that the government can only count about half of it) but this money is injected directly into the economy at the consumer spending level; it bypasses the investment sector.  Resulting vibrant consumer spending registers as GDP.  To read the local press one would think that GDP is the one and only economic measure.  GDP is just one economic metric; before one can speak of real, sustainable growth then job growth and investment must also be seen to increase.

 

---

 

Six months ago on this forum I predicted a Peso/Dollar rate of 50:1 after two to three years.  Nothing I have read has changed my opinion.  The companies that comprise the Philippine stock market have failed to take advantage of the influx of hot money by investing in the economy.  What they are doing with the funds I don't know.  Ayala Land (spelling?) did raise 12 billion Pesos, presumably for investment in new housing projects (Cavite, etc.?).  However what is needed is industrial investment that creates jobs and potential export goods.  This is not happening.  Instead there are more and more signs that the economy is reverting to 'business-as-usual:' an economy dominated by imports and propped up by overseas remittances.

 

The government too is somewhat slow in investing and we all have our suspicions about what happens to the majority of the money made available for government projects.

 

There's a lot of 'bluster' about the economy.  Just as an example: what the hell does this mean?  "But Bautista said the stronger dollar sentiment is “a systemic thing and is regional if not global in nature.”  Unaldulterated bullshit.

 

[broden 57,113]

the exchange rate getting higher is definitely better for most all the ofw's sending money home .. seeing as many if not most of them send home the same amount or try to anyway even when the rate goes down by working more and keeping less for themselves 

[towboat72 820]

Better for whom?

    Better for me ! because it was raising . that means I get more bang for my buck.

    The highest I have seen it in my travels here has been 49.85 and that sure beats  41 something .

[ed villas 232]

closed friday at 44.02 ,

bsp states it closed at 43.84

Edited December 7, 2013 by ed villas

[panther 845]

same with the pound its the highest i,ve seen it in 3 years ,it went down to as low as 62.00 so i,m very happy right now I just wished I had some spare bucks back home to exchange while the goings good.