January 18, 2009

Peso seen to decline futher this week

The peso is seen to be sliding further to the dollar as the inauguration of the newly elected president Barack Obama draws near.

Analysts see the peso's downward trend this week despite the declaration of a unilateral ceasefire of the Israeli forces on its offensive on Hamas that should be favorable to our workers working in the region.

"[Our bias is still towards] a weaker peso," a trader said.

Remittances from overseas Filipino workers (OFWs) have not been enough to sustain the peso’s rise, he added.

"Due to the financial crisis, many OFWs are being threaten by massive layoffs, meaning there will be less dollar remittances in the succeeding months," he added.
The peso hit an intraday high of P47.09 and a low of P47.28 before ending at P47.20 last Friday.

Constantino B. Bombais, first vice-president and treasurer of the Philippine Business Bank, expects the peso to trade between P47.20 and P47.50 to the dollar this week.

He added that the inauguration of US president-elect Barack Obama on Jan. 20 would impact Asian currencies.

"I think the inauguration of Barack Obama will have an effect on all Asian currencies, but that will come in later," Mr. Bombais said.

The newly elected president, he said, is expected to work on measures to stimulate the US economy.

"I think the US will keep the dollar’s strength intact and push it stronger. For the Philippines, that would mean a weaker peso," Mr. Bombais explained.

However, Philippine based exporters favor the current trend as they compensate from their setbacks from the low orders they received last season. Mostly affected were craft and furniture makers who have already felt the effect of the current global financial crisis.

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