Aquino disputes forecast of peso hitting 41 to the dollar

Business Mirror

Posted at Oct 22 2010 12:50 AM | Updated as of Oct 22 2010 07:26 PM

CAUAYAN Isabela—President Aquino said on Thursday that contrary to the expectations of some from the business sector, a P41-to-$1 exchange rate is not likely to happen this year because the Bangko Sentral has been doing a good job of maintaining a stable exchange rate.

The President made the statement at a news briefing here after he was asked to comment on the forecast of the international bank HSBC that the peso would appreciate to P41 to the dollar by the end of the year.

“That P41 [to $1]—perhaps not this year. At P43 [to $1], there’s a little bit of comfort. . . and Bangko Sentral has been doing its job well in trying for us to achieve some stability in terms of the exchange rate,” he said.

But is he concerned about the prospect of a P4- to-$1 rate? The President said, “There are several [big] businessmen who’ve said figures better than that, but that, of course, negatively impacts our export sector, which is rebounding already and contributing a lot to the national economy and also adversely affects overseas Filipino workers. So there is pause for concern. There has to be some stability in terms of the exchange rate.”

Secretary Ricky Carandang of the Presidential Communications Development and Strategic Planning Office, said a P41-to-$1 exchange rate by year-end is “possible” due to “external factors but that this does not contradict the President’s statement, which is only based on the domestic perspective.

“But I think if you factor in the external reasons, then you can say that it’s possible,” he added, and pointed out that among them is the possibility of a low US interest-rate regime in the next six months.

Carandang said the rate of appreciation of the peso against the US dollar would be a cause of concern if it is unique to the Philippine currency. “If the other exporting countries appreciate by a relatively similar amount, then it’s a problem we’ll all share. And assuming US and European buyers will face the same rate of depreciation by their currencies, as long as we remain within the band of general appreciation of other currencies, that’s fine. If not, then we should worry.”