Goldman forecasts stronger peso

Goldman Sachs Group Inc., one of the world’s biggest investment banking and securities firms, said recent political and macroeconomic developments in the Philippines have left the investment firm "more, not less bullish"on its outlook for the peso, projecting the local currency rising to 48 to a dollar in 12 months.

The peso will strengthen to 51 against the dollar in three months and 48 in a year, from prior targets of 52.50 and 52 to $1, respectively, Adam Le Mesurier, an economist in Singapore at Goldman Sachs wrote in a report yesterday.

"It’s looking more and more that she’s (Mrs. Arroyo) able to deal with these kinds of threats so over time the market will realize that and see the political risk is less and less," said Le Mesurier. "All this can lead to a stronger currency."

The report said Mrs. Arroyo continues to outmaneuver her opponents and that there is no clear opposition leader.

"Arroyo continues to outmaneuver her political opposition," wrote Le Mesurier in the report. "The various opposition factions were unable to gain any momentum."

"(Mrs) Arroyo has been good for the economy," said Le Mesurier. "There’s a bit of, ‘What doesn’t kill you makes you stronger,’ in the Philippines," he said.

At the Philippine Dealing System (PDS), the peso continued to gain more ground, rising by 31 centavos to close at 51.650 from Monday’s close of 51.960 to the dollar. The peso opened strong at 51.770 before hitting a high of 51.64 and a low of 51.815 to the dollar.

Ratings held

Standard & Poor’s sovereign debt ratings for the Philippines will "remain intact," said Ping Chew, a credit analyst at S&P, in a conference call with reporters yesterday.

S&P on Feb. 9 raised the counry’s debt rating outlook to stable from negative and kept its BB- rating on its long-term foreign-currency debt, three rungs below investment grade.

Fitch Ratings may hold its debt ratings on the Philippines, said James McCormack, the company’s head of Asian sovereign rating, in an interview yesterday. Fitch on Feb. 13 raised the debt rating outlook to stable from negative and kept its BB assessment of long-term foreign-currency debt, two rungs below investment grade.

The government forecasts growth will accelerate to between 5.7 percent and 6.3 percent this year from 5.1 percent last year.