Palace sees P54 to $1 rate by yearend

Malacañang echoed yesterday the optimistic forecast of Bangko Sentral ng Pilipinas (BSP) Governor Rafael Buenaventura that the peso would eventually stabilize at an average rate of P54 to a dollar by yearend.

Presidential Spokesman Ignacio Bunye said the BSP governor made these predictions to squelch renewed speculation on the peso-dollar exchange rate.

Bunye particularly doused cold water on the reported predictions by foreign banks in the Philippines that the peso would fall to P56 to $1 by the end of this month.

"That is contrary to the pronouncements of the BSP governor who said that by end of this year, it would go back to P54 to $1 average," Bunye said.

Without going into details, Buney reiterated that President Arroyo remains confident that the BSP is capable of using "the power and the tools" it has under the country’s law to arrest the further fall of the peso vis-a-vis the US dollar.

Bunye blamed anew the "mild transient shocks" of politicking and destabilization attempts against the government as among the non-economic factors that have caused jitters in the currency market and led to the depreciation of the peso.

President Arroyo reassured the public about the exchange rate in an official statement released by the Palace press office.

"The Central Bank has the power and the tools to stabilize the exchange rate in tandem with market forces," the President said.

The President, who is herself an economist, has kept a distance from the independent central bank which is the country’s chief monetary policy-making body.

President Arroyo said earlier the Executive Department and the BSP "have teamed up to defuse the operational causes" of the peso fall which slightly recovered yesterday.