Peso hits new low vs dollar

The peso plunged to a new low of 41.375 to the dollar during intraday trading at the Philippine Dealing System (PDS), its lowest level since touching 41.650 to the dollar on Oct. 27, 1998. It closed eight centavos lower at 41.355 from Monday's close of 41.275 to the dollar.

Bangko Sentral ng Pilipinas (BSP) Gov. Rafael B. Buenaventura said yesterday that the BSP still has no intention of intervening in the foreign exchange market despite the peso's continued fall against the dollar.

He assured, however, that the BSP will step in if it sees that the peso is under speculative attack.

"The fall of the peso was due to a similar fall in all regional currencies," he explained.

Currency traders said banks were buying up dollars in anticipation of strong corporate demand for the dollar ahead of an expected rise in key US interest rates in May.

Traders said heightening violence in Mindanao, where Muslim rebels hold 27 hostages, also contributed to the peso's continued fall.

The peso opened at 41.300 to the dollar to end at an average rate of 41.343 to the dollar.

To buoy confidence in the local currency, the BSP reported that the country's gross international reserves as of end-March reached an all-time high of $15.99 billion or about 5.8 percent higher than the end-December level of $15.11 billion.

This figure is equivalent to about 4.7 months worth of imports of goods and payments of services.

The BSP said that the increase in the GIR was due largely to the receipt of the cash proceeds from the government's Global bond offering worth $1.3 billion.

Foreign direct investments coming from Japan's Nippon Telephone & Telegraph (NTT) to Philippine Long Distance Telephone Co. (PLDT) and proceeds from Sun Life of Canada's listing at the Philippine Stock Exchange also contributed to the substantial increase in the reserves.

The BSP said the $16 billion GIR level brought the country's net international reserves to $12.7 billion.

Sources said the government is still not concerned about the slow depreciation of the peso as it would have no impact on the budget.

They said the peso merely reflects market and regional trend. "If all other regional currencies and even the euro is falling, the peso is not strong enough to buck the trend," they said.