NEDA chief warns forex speculators

Those who deal in "hot money" get burned.

This was the warning of Socioeconomic Planning Secretary Felipe Medalla to currency speculators who engage in "contrived" foreign exchange transactions and earn "margins" in the highly-risky short-term buy-sell deals.

They do not only hurt the peso, they also take a "hit" or losses in the process.

"Remember that when you speculate, you also need pesos because you have to convert your dollars to pesos (and use them to buy or sell dollars)," Medalla said.

But this week, such speculative activity has subsided as the peso posted hefty gains.

The peso closed higher against the dollar, buoyed by strong remittances from overseas Filipino workers (OFWs), lack of corporate dollar demand, and an absence of negative news on the political front, traders said.

It closed at 49.120 per dollar on the Philippine Dealing System last Wednesday, up from 49.490 at Tuesday’s close. It hit an intraday low of 49.350 and averaged 49.165 per dollar.

The peso strengthened even as the Bangko Sentral ng Pilipinas was believed to have bought dollars to replenish its foreign exchange reserves through two large foreign banks in Manila.

Traders said the BSP bought about $50 million to $60 million, accounting for a third of total transactions for the day.

The central bank’s interventions in the currency market, along with debt servicing, have cut its reserves to $14.4 billion at the end of October from a record high of $16 billion at the end of March.

Traders said relative quiet in the political front, as the Senate proceeds with the impeachment process, supported the peso’s rise.

The stock market, meanwhile, has remained relatively calm over the past few days as investors start to focus on bargain prices of selected blue chip issues.