Foreign banks, in particular, are optimistic that the new administration would enjoy at least a hundred-day honeymoon period while awaiting the critical appointment of the new economic team.
The Bangko Sentral ng Pilipinas (BSP) said earlier that the peso could recover to 54-to-the-dollar level but foreign banks were even more optimistic, saying that the peso could bounce back to its early 2003 level of 52-to-the-dollar.
"It’s not far-fetched, we see that as a possibility," said John McGowan, treasury chief at the Hongkong and Shanghai Banking Corp. (HSBC) Philippines.
According to McGowan, however, the market would be watching the appointment of new officials to key positions on the fiscal and monetary departments.
"A hundred-day honeymoon is usual while everyone is watching out who will be appointed into the economic team," McGowan said. "It doesn’t really matter who will win, the important factor is the removal of the uncertainty."
At the Philippine Dealing System (PDS), the peso weakened by six centavos to close at 55.86 from Wednesday’s close of 55.80 to the dollar. Total trading was unsually heavy at $228.4 million on an average rate of 55.880 to the dollar.
McGowan said HSBC had no expectations of who will win the presidency but he admitted that in a close fight, the incumbent with political machinery would win.
"Exactly how far this (peso) recovery will go and for how long, we don’t know," McGowan said, adding that the first decisions of the new administration would be critical in sustaining the market.
The peso has already begun recovering since this week, appreciating to as high as 55.66 to the dollar for the first time since January.
BSP Governor Rafael Buenaventura said the peso would likely recover to 54 to $1 level after the elections although he said it might have more difficulty sustaining its current run-up right before May.