Analysts said the foreign exchange market also got a boost from President Arroyo’s announcement of increased spending on infrastructure.
Mrs. Arroyo said in her annual State of the Nation (SONA) address to Congress on Monday that fiscal reforms had provided the government with the necessary funds to embark on an ambitious program of infrastructure projects.
"The President’s speech gave invetors a clear sense of direction on where the country is headed. She presented a clear road map for the next couple of years," said Astro del Castillo of First Grade Holdings.
"Obviously, this should benefit Philippine companies who will likely participate in these various infrastructure undertakings," he added. "The master plan is there and it looks like it is acceptable to investors," said Harry Liu of Summit Securities.
Yesterday’s closing level of the peso was the strongest in more than 10 weeks while the benchmark Philippine stock index extended a gain to its highest since June 6.
Analysts said global investors bought $19.4 million more Philippine equities than they sold this month.
"Optimism about the fund inflows to the Philippines is a big support for the peso,’’ said Tsutomu Soma, a bond and currency dealer at Okasan Securities Co. in Tokyo. "When the stock markets are rising, it’s easier to buy the peso."
The currency may rise to around 50.80 to the dollar in four to six weeks, Soma said.
At the Philippine Dealing System (PDS), the peso opened at 52.16 before hitting a high of 51.86 and a low of 52.16 to the dollar. Trading was heavy at $716.18 million on an average rate of 51.971 to $1.
"Technically, the peso broke a big level at 51.95, encouraging more buying of the currency (peso),’’ Soma said. "It looks quite bullish on the technical chart and sentiment for the peso appears to be good."
Analysts said that reports that imports surged in May due to higher electronics purchases boosted stocks on hopes that exports will grow, boosting corporate earnings and demand for the peso.
The National Statistics Office (NSO) reported that imports gained in May as manufacturers bought more computer parts to make electronic goods to sell overseas.
Imports increased for a 14th straight month in May, up 15.2 percent to $4.38 billion from a year earlier, after climbing 7.4 percent in April, the government statistics office said.
Philippine exports gained 17.3 percent to $3.88 billion from a year earlier, with electronics accounting for about two-thirds of total shipments. – AFP