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How far down will the Peso go?

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Art, just a re(tired) Fil-Am:

--- Quote from: Gray Wolf on November 04, 2012, 05:51:12 AM ---
--- Quote from: \"Mr. Lee\" post=47769 ---Well if this news article Peso seen to hit 30:$1 next year is even close to correct then many of us may be pretty upset
--- End quote ---

The article\'s title doesn\'t reflect the statements made:

\"The peso could strengthen to the 30-level against the dollar next year as investors continue to flood emerging markets regardless of the outcome of the US elections on Tuesday, an investment bank said.

In its latest research note, Bank of America-Merrill Lynch (BofA) said it expects the peso to average 41 to a dollar by the first quarter of 2013, before appreciating further to 39.80 for the rest of the year.

BofA’s forecasts are stronger than the government’s official assumption of 42-45 next year. The peso closed at 41.18 on Wednesday, the last trading day before the holidays.\"

I think they meant to print 40:1, not 30:1...    Maybe I\'m missing something?  Or maybe they\'re using the SWAG method.   ;)   :P

--- End quote ---
I think 30 to 1 is a misprint! No expert's crystal ball is that reliable to predict that kind of a low exchange rate all of a sudden!  ???

Article in todays paper on Piso

Tom/ Roxas City

Peso Registers Its Biggest Appreciation
In 2012
December 28, 2012, 5:41pm
The Philippine peso is set for its best annual advance since 2007, spurred by the fastest economic growth in Southeast Asia and speculation that the nation is on track to win its first investment-grade rating.

Standard & Poor’s raised its outlook on the country’s BB+ debt rating to positive from stable last week and said an upgrade is possible in 2013 as public finances improve. The peso reached its strongest level since March 2008 last month after official data showed the $225 billion economy grew 7.1 percent last quarter, the fastest pace in two years. Its rally in 2012, Asia’s best exchange-rate performance after South Korea’s won, prompted the central bank to impose limits this week on banks’ non-deliverable currency forwards positions.

“The Philippines turned into the darling of investors in 2012 as growth exceeded expectations and further upgrades look imminent,” said Dalmacio Martin, senior vice president at BDO Unibank Inc., the nation’s largest lender. “Benign inflation allowed the central bank to cut policy rates four times this year, while a narrowing budget deficit enhanced our allure.”

The peso strengthened 6.7 percent this year to 41.075 per dollar at 10:37 a.m. in Manila, data from Tullett Prebon Plc show. That’s the biggest gain since a 19 percent appreciation in 2007. The currency climbed 0.1 percent today and was little changed from a week ago. Philippine financial markets will be closed Dec. 31 and Jan. 1.

One-month implied volatility in the peso, a gauge of expected exchange-rate swings used to price options, fell to 4.4 percent from 7.75 percent a year ago.

S&P’s decision to bolster the nation’s credit outlook on Dec. 20 came a few hours after President Benigno Aquino signed into law higher tobacco and liquor taxes, which are estimated to boost revenue by 184.3 billion pesos ($4.5 billion) in the first four years of implementation. The credit assessor last raised the rating by a notch in July to the highest sub-investment grade, followed by a similar move by Moody’s Investors Service in October.

The country’s inflation rate fell to a five-month low of 2.8 percent in November, according to the most recent data. The central bank reduced its benchmark overnight borrowing rate by a total one percentage point in 2012 to an all-time low of 3.5 percent. The government’s 11-month budget deficit of 127.3 billion pesos was less than half the 2012 ceiling, according to a report yesterday.

The Philippines will likely reach investment grade in 2013 and managing the currency would become “more challenging” by then, central bank Deputy Governor Diwa Guinigundo said Dec. 21.

Bangko Sentral ng Pilipinas imposed a ceiling for non- deliverable forwards for local lenders at 20 percent of capital, and 100 percent for foreign entities, Governor Amando Tetangco said in a Dec. 26 briefing. Banks have two months to comply with the regulation, which will be reviewed after six months, Tetangco said.

Earlier this year, Bangko Sentral ordered lenders to provide more funds to cover risks on forward transactions and banned overseas investors from its special-deposit accounts. Capital controls won’t be necessary at this stage, Tetangco said this month.

“Excess liquidity and lingering positive sentiment will remain as drivers, but it is difficult to replicate the same results next year as we have become relatively expensive,” Martin said. “Regulatory prudential measures will also limit returns.”


--- Quote from: Lee on November 04, 2012, 05:33:30 AM ---Well if this news article Peso seen to hit 30:$1 next year is even close to correct then many of us may be pretty upset

--- End quote ---
The peso is now closing in on 48 to 1 US dollar, what a difference some years make.

Next year watch how things go with all of the infrastructure projects planned.  It's a huge amount of money.  Most (all) infrastructure projects will have foreign company partners.  So if those projects actually get out of the planning stages a lot of money will be going out of the PHL to pay these foreign companies.  Money going out of the PHL means a weaker peso.  U.S. interest rate hikes means a weaker peso.  It could go to 49 or 50 next year.  (This is not me talking but bits and pieces I read here and there.)

Art, just a re(tired) Fil-Am:

XE Currency Converter: USD to PHP
1 USD =49.1243PHP

2016-11-10 22:32 local time


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