BDO: end-2009 exchange rate at P47.75:$1

By Erik de la Cruz, Business Mirror

Posted at Nov 24 2009 02:16 AM | Updated as of Nov 24 2009 10:16 AM

MANILA - Banco de Oro Unibank (BDO) still expects the peso to end the year in the 47-per-US dollar territory, as it sees the possibility that remittances coming in during the Christmas holidays from Filipinos abroad may not be as strong as expected.

The peso continued to move in and out of the 47 territory and on Monday traded between 46.88 and 47.07. It fell 0.7% from the previous week to 47.10 on Friday, as another bout of risk aversion hit emerging-market currencies amid fresh worries about the strength of the global economic recovery.

“We are keeping our year-end dollar exchange-rate forecast of 47.75,” BDO chief market strategist Jonathan Ravelas said, as the peso slipped back into the 47 territory last week after staying for a few days at 46 levels.

The bullish outlook on Asia, which is seen leading the global recovery from recession, and the shift in investor interest?toward high-yielding currencies amid the exceptionally low interest rates in the US, pushed the peso to a new 2009 high of 46.25 in October.

Ravelas said renewed risk aversion and waning remittances had pulled down the peso back to the 47 levels.

Some of the remittances expected to come in during the Christmas holidays, he said, “could have been [sent] earlier than usual.”

BDO—the country’s largest bank in terms of assets, loans and deposits—was last year’s top remittance bank, cornering about 26% of the $16.4 billion sent through banks.

A number of banks decided to waive fees for remittances in October after back-to-back typhoons and massive flooding in many parts of Luzon destroyed billions of pesos worth of properties.

Latest data from the Bangko Sentral ng Pilipinas showed remittances coursed through banks hit $1.4 billion in September, 8.6% higher than the inflows recorded in the same month last year.

Cumulative remittances in the first nine months increased by 4.2% to $12.8 billion.

Traders said trading may be a bit more cautious in the currency market this week,?especially before the release of gross domestic product data on Thursday.

Some economists, however, have presented optimistic assessments of the domestic economy’s performance in the third quarter.

“We look for an expansion of 2.6% year-on-year, faster than the 1.5% seen in the second quarter and at the top end of market estimates and official guidance,” said economist Lim Su Sian of DBS Bank.

“Sequentially, our forecast translates into an expansion of 2.1% [quarter-on-quarter]—still a strong pace of growth, despite being a touch slower than the 2.4% rebound seen in the second quarter,” she wrote in a note.