Peso to rise further – House leader

A key member of the House of Representatives predicted yesterday that the peso would soar to a new high once the government receives the $521 million full payment for the state’s indicted 6.38-percent stake in Philippine Long Distance Telephone Co.(PLDT).

"We are definitely counting on the peso to gain more ground against the dollar in the weeks ahead, partly on account of the proceeds from the sale," Deputy Majority Leader Eduardo Gullas said.

He was referring to the sale of the government’s 46-percent stake in Philippine Telecommunications Investment Corp. (PTIC), a holding company that owns 13.85 percent of PLDT. The state’s 46-percent stake in PTIC is equivalent to 6.38 percent ownership of PLDT and is worth P25.2 billion.

The government has sold its shares in PTIC to Hong Kong-based First Pacific Group, which already owns 54 percent of the holding company.

"The massive infusion will build up the country’s already abundant dollar supply. This will further drive the dollar down against the peso," Gullas said.

"The stronger peso, in turn, should provide government as well as the private sector greater opportunity to accelerate dollar debt reduction programs through prepayment," he said.

The government expects to receive full payment from First Pacific once the sale closes on March 2.

Budget Secretary Rolando Andaya Jr. earlier said government stands to save this year some P11 billion on interest expense alone on dollar-denominated loans if the exchange rate stabilizes at P48 to the dollar.

He said every peso gain would slash government’s interest expense by P2.2 billion.

On Friday, the Bangko Sentral ng Pilipinas said it has earmarked $805 million to pay more foreign loans ahead of maturity within the next two months to cut on interest payments.

Gullas said the aggressive dollar debt retirement programs of government and private companies would also have the positive effect of sustaining the peso’s rally against the dollar.

"Going forward, the prepayments imply there will be much lesser demand for dollars in the months ahead since there will be fewer dollar debts to service," he said.

Owing to government’s improved financial condition, the continuing surge in the remittances of overseas Filipino workers and increased foreign investments, the peso is now hovering over six-year highs.

The Amsterdam-based global financial giant ING Group sees the peso soaring to 45 to the dollar this year.

London-based HSBC Holdings expects the currency to hit 47.50 to the dollar.

Metrobank, the largest local bank, sees the exchange rate improving to P46 to the dollar this year. It closed at P48.15 to the dollar last Friday.