[merged] Improving Peso-Dollar Exchange Rate

[jim]

It's still a wait and see situation. E-VAT helped but we all know that REMITTANCES DRAMATICALLY strengthened the PESO.

[mrpink]

i really don't feel the effect of the peso appreciation (yet) .. hindi naman bumababa yung presyo ng mga bilihin .. ang sinasabi lang ng mga finance dept eh liliit yung foreign debt natin .. pero wala naman nagsasabi kung may increase sa budget allocations in the other sectors of society .. baka pork barrel lang yung itaas nila ..

ang na-feel ko lang impact eh medyo nawalan ng value yung $$ accounts and investments ko .. at least mas mura na pumunta sa HK Disney .. hehe ..

[zeagle]

Hay naku! This government is taking credit for something that is not their own doing. OFWs ang tunay na mga bayani ng bansa!!!!

[Isuzoom]

Its not pro or anti GMA ka, very sensitive kasi ang economy natin sa political happenings dito sa atin. Unlike sa Taiwan or Korea kahit nagsuntukan na mga politico nila still steady pa rin ang economy, dito sa atin simple maling words lalabas sa mouth ng politico nag rereact ang market. Negosyante din ako, kalokohan diyan sa manila affected kami dito sa probinsya.

[explorer]

this one from a business newspaper (businessworld online)...and what does it says?

http://www.bworldonline.com/BW010406/content.php?id=001

Further peso gains seen
P52.50:$1 next target but dealers warn of reversal

Strong dollar remittances from abroad and lack of demand are expected to keep pushing the peso up, with the currency testing the P52.50 level in the near term after reaching a 32-month high in the past couple trading days.

"The direction is further appreciation but there will be bouts of correction," said Tonypet F. Serrano, United Coconut Planters Bank foreign exchange trader.

"It is likely, although it is difficult to tell, especially if demand comes in," cautioned Rovic M. de Guzman, Union Bank of the Philippines foreign exchange trading head.

The peso yesterday broke the P52.80 resistance and rose to as high as P52.57. The last time the peso traded at these levels was in May 2003. Dealers said the near-term target is P52.50 but if it breaks, the peso is seen to test P52.30.

"[The] market is still trying to look for where the dollar is going to support. The near-term target is P52.50. If it breaks, based on the charts, it might test P52.30," a currency trader from a local bank said.

The local currency yesterday opened at P52.78, reached a low of P52.80 before it climbed as high as P52.57. It closed at P52.66, 17.5 centavos up from Monday. It averaged stronger at P52.652, up from P52.903.

Banks said the trend was supported by remaining inflows from overseas Filipinos living abroad as well as lack of market demand.

"This is still an extension of the trend. Admittedly, there are still residual tail-end remittance flows. The demand side is thin because of it is still the start of year," Mr. Rovic said, explaining that importers usually start buying their dollar requirements at the middle of the month.

But he said that if the price of the dollar remains at these levels, some importers will begin covering and start hedging for their requirements, which could lead to a weakening of the peso.

"If demand starts to catch up and surpass supply, we might see a reversal of this trend," Mr. Rovic said.

Banks said the raising of the value-added tax (VAT) rate next month is crucial for the peso’s strength.

"If the government manages to raise the VAT, and the fiscal performance continues to improve this year, the picture is becoming rosier. If investors see that reforms are in place and that there is political will for it to continue, then they will invest more," an analyst from a foreign bank said.

More investments from abroad will foster an increase in the supply of dollars in the country, which eventually leads to a stronger local currency.

The government is set to increase the VAT rate to 12% in February from the current 10%. This is mandated by the new VAT law which is expected to bring in an estimated P80 billion to P82 billion in revenues this year. The law is the cornerstone of the government’s efforts to curb its chronic budget deficit.

However, other traders said the peso’s rise should be gradual.

"The peso has risen nearly 40 centavos in the last two days. It might also reverse quickly," one trader voiced out.

Although a stronger currency benefits importers and the government because it leads to lower interest payments on the country’s dollar denominated loans, it could affect the country’s export sector.

"What importers want is a gradual movement so they can plan for it. Because companies can not just change their strategies overnight," the trader explained.

Last Monday, the Philippine Exporters Confederation Inc. complained that a strong peso is hurting the industry. It said the country’s export sector has lost its competitiveness ever since the peso appreciated beyond the P54 level against the dollar since it has made local goods more expensive.

Also yesterday, Development Bank of the Philippines (DBP) President Reynaldo G. David described the peso as the "best performing currency" as he predicted a P52 to the dollar rate in the first quarter.

The market, said Mr. David, is finally reacting to fiscal reforms instead of political noise.

"This is a fiscal driven improvement," he said.

He cited two reasons for the continued strengthening of the peso: the implementation of a two-percentage point increase in the value-added tax rate next month, and growing remittances from overseas Filipino workers.

Remittances, he said, are expected to remain strong despite the end of the holiday season. -- Karl Lester M. Yap with a report from M. E. P. Osorio

Asian currencies hit new highs

SINGAPORE -- Asian currencies hit multi-month highs yesterday, moving into 2006 on a strong note thanks to gains in local stock markets and optimism about economic growth in the region.

The Taiwan dollar firmed up by more than half a percent from Monday’s local close to T$32.595 per US dollar, its strongest level in almost four months.

The South Korean won rose to 1,002.3 against the dollar, its highest level in more than seven months, before suspected intervention by the Korean authorities trimmed its gains slightly in late trade.

Both north Asian currencies have benefited from strong foreign buying of local stocks. Foreign investors were net sellers of Taiwan stocks yesterday but were net buyers on every trading day in December except one.

Dealers said Asian currencies also benefited from the view that the dollar was likely to weaken in coming months as markets anticipated an end to the US monetary tightening that bolstered the currency last year.

"Most people expect the dollar to depreciate quite sharply in the first quarter. So they are coming back from the holidays and trying to put on new positions * dumping dollars, especially against Asian currencies," said a trader in Singapore.

Domestic factors such as better-than-expected economic numbers also weighed in favor of Asian currencies.

But dealers said trade remained thin after the Christmas and New Year holidays and this exaggerated price moves. Markets in Japan, Thailand, New Zealand and China were closed yesterday.

Stronger-than-expected economic growth helped push the Singapore dollar to S$1.6548 per US dollar, its strongest in more than four months.

Singapore’s economy grew at an annualized rate of 9.7% in the fourth quarter of 2005, thanks to a big boost in manufacturing and stronger domestic demand, government data showed yesterday. The figure was higher than a 7.2% growth rate forecast by economists in a Reuters poll last week.

"The data continues to hint that there is a big chance that the Monetary Authority of Singapore will tighten policy at the April meeting and I think the market is reacting to that," said John Cairns, head of research at IDEAglobal.

The Indonesian rupiah, supported by data released on Monday, rose to a three-week high of 9,735 per dollar.

Indonesian consumer prices rose 17.11% in December from a year earlier, below expectations of 18.30% and down from November’s 18.38%.

Dealers said the data suggested the central bank may not need to lift interest rates much further in order to contain inflation and that this was positive for the rupiah.

The Philippine peso extended its gains to hit a 2-1/2-year peak of P52.57 per dollar, up about half a percent from Monday’s close in local trade.

Dealers said a breach of key chart levels on Monday, optimism about the Philippine government’s fiscal reforms and gains in the local bond market boosted the peso.

"The breach of the 53 level yesterday was quite significant. There is a lot of bullishness right now with the economy and on the budget deficit being lower," said a trader in Manila.

The Philippine budget deficit is expected to narrow to P125 billion, or 2.1% of GDP, in 2006, helped by additional revenues of about P80 billion from an increase in the value-added tax rate to 12% from 10%.

[BlueBimmer]

wowowie :D

[cutedoc]

mababa dollar ngayon kasi christmas, expect dollar to rise up again starting feb, then on summer may go down a bit but would strike up starting wet season, factual trend naman to, unless we encourage lotsa tourist to spend their money here in the philippines, we should offer something more, boracay is good but an innate attitude of pinoy is being too much aggressive, so rather than boracay stay in a pristine condition, masisira lang

OT: nursing as well, parang mushroom school of nursing, imagine a bottleneck traffic thats a bad attitude of pinoy

[niky]

You can make between 200k and 300k monthly in the US as a nurse or special teacher... kaya lang, the cost of living is steep.

p're, sa oilfield, may sarili na ba kayong bunk space and food? If so, that's hella sweet!

[jeanpierre]

You can make between 200k and 300k monthly in the US as a nurse or special teacher... kaya lang, the cost of living is steep.

p're, sa oilfield, may sarili na ba kayong bunk space and food? If so, that's hella sweet!

Accommodation, food and roundtrip ticket is free. Then, tax sa country where we are working is paid by the company. Kaya full ang take home pay straight to my bank account.

[niky]

Accommodation, food and roundtrip ticket is free. Then, tax sa country where we are working is paid by the company. Kaya full ang take home pay straight to my bank account.

P're, where do you live? I'm thinking of kidnapping you and taking your place... Bwahahahaha!!!!

the improving peso is not necessarily a good thing... its not the only thing to look at and say "hey are country is improving" this is really hurting the exporters...
look at china, they are doing everything they can to prevent the yuan from appreciating..
otherwise theyd be f*cked if they really let the currency float

China and Japan BOTH keep their currencies undervalued. That is because a lot of their GNP is in exports. Low valuation means their products are cheaper outside, thus, more competitive. The US has long complained that Japanese products are underpriced because the yen is too low.

The Philippines is a different case. Exporters may be hurt initially by a strong peso, but our debt situation can only be improved by it. The currency has long been undervalued and should stabilize at 52.5 or 50, but I really think the government will step in and stabilize it around there... I hope. Afterwards, we can focus on improving the domestic labor situation... local business and consumers will hopefully see the benefits of a stronger peso in the coming months.

But if the government allows the peso to continue moving upward, then that'll just cause chaos.

[mrpink]

China and Japan BOTH keep their currencies undervalued. That is because a lot of their GNP is in exports. Low valuation means their products are cheaper outside, thus, more competitive. The US has long complained that Japanese products are underpriced because the yen is too low.

hmmm .. with regards to japan .. my understanding is that even if you take away thier exports they'll still do pretty good .. savings and local spending is what is driving their economy more than exports .. which is why even if japanese products are more expensive in japan they still have control over the domestic market because the japanese still buy their own .. i think the US is just complaining about the currency valuation because they still find it difficult to penetrate the japanese market .. if you think about it, if the japanese yen were stronger than they would be buying more of US companies which obviously the US wouldn't want ..

[BlueBimmer]

and the taxes stateside is very high daw kaya ang takehome pay di ganyan kalaki

[Automahn]

Wow! Para akong nagcrash course on economics dito. Let's just hope for the best.

[spiff]

the improving peso is not necessarily a good thing... its not the only thing to look at and say "hey are country is improving" this is really hurting the exporters...
look at china, they are doing everything they can to prevent the yuan from appreciating..
otherwise theyd be f*cked if they really let the currency float

[mrpink]

the diff between an appreciating yuan and an appreciating peso is of course in the mindset of investors .. an appreciating yuan would indicate that the cost of doing business in china is getting more expensive ... and appreciating peso would mean that the philippines is getting more stable ..

[BlueBimmer]

lugi na ako sa dollars...

[Josh0027]

let's just wait till feb or march...

[BlueBimmer]

hmm mamaya sa feb umabot ng 50!

[badsekktor]

increase siguro ng OFW's kaya increase din pasok ng dollars.

[niky]

Actually, that's half of the other purpose of Japanese currency strategy. Japanese food, for example. Japanese food isn't only expensive out here, it's expensive THERE. But currency juggling plus very restrictive trade and tariff barriers keep the local food industry afloat.

Japan and the US are alike in that they keep their food producers alive with unfair tariffs, restrictions, quarantines, quality standards and huge subsidies (i.e.: even if you don't grow anything much, you still get PAID). The American subsidies makes US food cheaper than it should be. The Japanese subsidies mean they can still survive in the market even with low volume and uncompetitive prices. If the Japanese and American governments drop their subsidies, our agricultural sector would probably see a trade boom (much like our sugar producers had way back when).

Japanese taxes, registration and insurance regulations make it hard to own non-Japanese vehicles... actually, the strict registration regulations does double duty, as it makes it easier for Japanese owners to justify selling their cars after just three or five years and buying a new Japanese vehicle. The currency valuation doesn't hurt either, as it makes foreign vehicles much more expensive.

Japan would still be strong if it existed in a vacuum, because of their rigid strictures and high industrialization, but in the new globalized market, they're facing stronger and stronger pressure to open up their market.