Medalla sees peso gaining

"The country’s economic fundamentals point to a strong peso, and this is signaled by the easing of upward pressure on interest rates," Socioeconomic Planning Secretary Felipe Medalla said in a meeting with business journalists Thursday night.

Medalla said he sees the peso stabilizing at just a slim premium above the Thai baht to which it is traditionally pegged on widely perceived similarities of the Philippine and Thai economies.

Since the baht is hovering around 43.60 per dollar, he said the peso should be averaging 47 to 48 per dollar. "Undervalued ang piso," he said.

He said two key factors buttress the peso’s resilience against any further downward pressure – a favorable foreign trade balance and strong foreign exchange remittances from overseas Filipino workers.

On the domestic front, agriculture, he added, is also turning out to be this year star performer.

OFW dollar remittances traditionally peak toward the end of the year as foreign employed workers send home the bulk of their income for the holiday spending needs of their families here.

"In the first nine months of the year, we had a trade surplus of $40 billion," Medalla noted, adding that this is the biggest such surplus in as many years."

"The market perception is that of stability," Medalla said, noting that the recent leadership change in both houses of Congress and with the impeachment process underway in the Senate "helped the process (stabilization) along" on growing market perception that a resolution (of the political crisis) was forthcoming."

In currency trading, the peso weakend only slightly against the dollar, pressured by corporate demand for the US currency and the continuing political uncertainty, traders said.

The peso closed at 49.890 per dollar on the Philippine Dealing System, down from 49.800 at Wednesday’s close. It hit an intraday high of 49.904 per dollar.

On the other hand, stocks finished mixed Thursday, with the main index slipping lower on profit-taking traders said.