Peso tumbles to 56 to the dollar

Posted: 4:58 PM | Jun. 29, 2005

Erik de la Cruz
XFN-Asia


THE PESO breached the psychological barrier of 56 to the US dollar as moves to oust President Gloria Macapagal Arroyo, accused of cheating in last year's presidential election, gain more ground, dealers said.

They said the dollar's general strength also weighed on the peso, but they saw the central bank selling dollars in the spot market to prevent a freefall of the Philippine currency.



The peso closed at 56.05 to the dollar, slightly off the day's low of 56.06, on volume of 469.88 million usd.

It was the peso's weakest finish since January 11, when it settled at 56. 07. It closed at 55.69 Tuesday.

Dealers said demand for dollars was stronger in the afternoon session after the widow of film actor Fernando Poe, whom Arroyo defeated in last year's election, joined the calls for the president to quit.

Arroyo is also facing an impeachment complaint filed in the House of Representatives.

Arroyo publicly apologized on Monday for a controversial telephone call she made to an election official during the vote-counting last year, prompting her opponents to step up their calls for her resignation.

She has repeatedly denied she cheated in the election and has indicated that she will remain in office.

"There was a knee-jerk reaction after Susan Roces refused to accept Arroyo's apology. We will likely see a test of the peso's all-time low [of 56.45] in the coming days," a dealer at a commercial bank here said.

Earlier today, central bank deputy governor Amando Tetangco said the peso's continued weakness against the dollar was due to a confluence of factors, among which is the across-the-board strength of the US unit and the usual month-end dollar requirements of importers.

"Some market players are also citing the political noise," Tetangco told reporters on the sidelines of a businessmen's conference.