BY MAX ESTAYO
THE peso yesterday surged to a new
seven-year high of 42.67 to the US dollar despite massive
central bank intervention to cap the strength of the peso.
The central bank accounted for as much as
half of the $759.50 million traded yesterday, traders said.
The peso closed at 42.795, up from 43.305
last Thursday.
Traders said the dollar weakened worldwide
and the month being remittance season, dollars flooded the
market.
The Bangko Sentral ng Pilipinas thrice
tried to hold the peso above the 43 level.
The BSP intervened at the 43.05 levels then
let go, traders said. It again surfaced at the 42.85 and 42.75
levels but still to no avail.
At the Philippine Dealing System, the local
unit opened strong at 43.19 from the previous day’s close
43.50, then traded at 43.19-42.67.
It then closed at 42.795, up by 51 centavos
from 43.305, its best finish since June 2000.
Total turnover reached $759.5 million from
$602.9 million Thursday.
The gain brought the peso’s appreciation to
14 percent year to date, making it the fastest rising currency
in the Asian region, edging out erstwhile top performer Indian
rupee.
"Fed chair Ben Bernanke’s latest statement
confirmed the view the Fed may cut its rate anew because the
economy is weakening. The dollar was at an all-time low
against all major currencies," said Marcelo Ayes, senior vice
president of Rizal Commercial Banking Corp.
"So it’s really coming from the dollar
fundamentals, plus there were equity flows and remittances
from overseas Filipinos as we are now in the remittance
season," Ayes said.
Ayes said investors eyeing this month’s
equity offerings sold their dollars on expectations the
currency will continue to weaken, boosting the peso further.
The dollar’s fall followed Bernanke’s
comments the US economy might grow weaker than expected as
subprime risks rise.
The Fed has cut its key rate twice in the
last two months and it might lower the rate further to head
off recession, traders said.
This would encourage flows in emerging
markets including the Philippines, with traders saying the BSP
is locked at a 50-50 chance of cutting its own rate next week.
"It has room to cut but it may keep the
rate unchanged as a buffer for the continued uptick in global
oil prices," one trader said.
The market will target the 42.70 level next week, according
to traders. The peso might rise to 42.55 or 42.40 if the
levels are breached, they said.
