Peso skids to 51.65

Continued uncertainty over a corruption scandal involving President Estrada dragged the peso to another record low of 51.65 against the dollar during intraday trading yesterday, and were it not for Bangko Sentral ng Pilipinas (BSP) intervention, the currency could have plummeted new depths versus the dollar.

At the Philippine Dealing System, the peso plunged to a historic low of 51.650 before recovering 17 centavos to end at 51.480 to the dollar. Yesterday’s close was 40 centavos lower than Friday’s close of 51.080 to the dollar.

Dealers said the peso weakened after a local bank reportedly bought dollars heavily, but BSP intervention checked the peso’s slide. "If the BSP had not intervened, the dollar could have easily hit 51.700," they said.

"Some exporters also sold dollars in late trading, so the peso recovered a bit," a dealer with a local bank said.

The embattled currency’s previous intraday record low was 51.400, posted on Friday when it closed at 51.080 to the dollar.

Sentiments toward the peso remain negative given the unresolved political crisis over allegations that President Estrada took more than P400 million in payoffs from illegal gambling operators, traders said.

BSP Governor Rafael B. Buenaventura’s comments that the monetary authority will come out with a new set of measures to stabilize the foreign exchange market this week did little to boost the peso.

The peso has weakened more than 20 percent against the greenback this year. Its fall accelerated this month after President Estrada was implicated in a jueteng payoff scandal.

Meanwhile, Buenaventura met with his predecessors, former Central Bank Governor Jose L. Cuisia Jr. and BSP Governor Gabriel C. Singson to seek "their expert advice."

While Buenaventura refused to divulge what was discussed in their meeting, he hinted that some new measures may be implemented this week to stem the continued fall of the peso.

Budget Secretary Benjamin Diokno, who was at the meeting together with Finance Secretary Jose T. Pardo and Economic Planning Secretary Felipe Medalla, said the group immediately ruled out the imposition of any kind of capital control.

Diokno said there were also some discussions about the reserve requirements, but it was agreed that only Buenaventura would have the right to speak about the option or measures the BSP would take to arrest the continued weakening of the peso.

The economic team reiterated their solidarity in nursing back to life the battered economy and vowed to separate economic issues from the current political turmoil.

At the same time, Buenaventura denied reports that the country’s gross international reserves has declined to $13 billion.

"The country’s GIR as of Oct. 25 remained at $14.5 billion," he said.

Pardo, for his part, also denied a report quoting him as having said that "all is lost politically for President Estrada." According to Pardo, he would not speak about political matters as his expertise is the economy.

Pardo also met separately with heads of several business groups such as the Philippine Chamber of Commerce and Industry and the Employers Confederation of the Philippines to secure their support for the economy.

Currency trading will be cut to half-day today. The financial markets will be closed tomorrow and Thursday which are public holidays.