Peso rebounds back to the 53-to-the-dollar mark

The peso broke anew into the 53 to a dollar level yesterday, closing at 53.940 as foreign fund inflows propped up the local currency ahead of the long Holy Week holiday.

The peso retreated back to the 54 to $1 level on Tuesday but continued its rally yesterday, opening strongly at 54.05 to the dollar before climbing above the mark to hit an intra-day high of 53.91 to $1. Yesterday’s close was 19 centavos stronger than Tuesday’s close of 54.130 to the dollar. Volume was strong, reaching $326.5 million at the end of the trading session.

The Bangko Sentral ng Pilipinas (BSP) said yesterday’s strong close was expected as inflows came back into the market after Tuesday’s pause.

The BSP had projected that the peso could even go up to as high as 52 to $1 if the current volume of foreign exchange inflows would continue for a few more weeks.

BSP Governor Rafael B. Buenaventura said the peso was gaining strength due in part to rising optimism about the Arroyo administration’s fiscal management program.

This optimism, according to Buenaventura, was expressed in terms of foreign fund inflows into the capital market which had just become active with initial public offerings (IPOs).

If inflows continued in the present trend, Buenaventura said it was "very likely" for the peso to pick up even more strength and go up to P52:$1 this month.