Peso competitiveness better than other currencies: BSP
MANILA – The Philippines peso remains competitive over other currencies in the region as its appreciation and volatility against the US dollar is still at the middle of the range in Asia.
Bangko Sentral ng Pilipinas (BSP) Governor Amando Tetangco Jr. told reporters the local unit have appreciated slower against the currencies of neighboring countries.
Last November 26, 2010, the peso closed at 44.18 against the US dollar, weaker compared to its performance earlier in the week when it touched the 43-level against the dollar.
As of last Friday, the local unit appreciated by 5.1 percent, faster than the 3.7 percent of the Indian rupee, 2.7 percent of the Chinese yuan, and 2.2 percent of the Korean won.
It was, however, lower than the 11.1 percent appreciation of the Thailand baht, 9.9 percent of the Japanese yen, 9.7 percent of the Malaysian ringgit, 7.6 percent of the Singapore dollar, 5.9 percent of the new Taiwan dollar and the 5.5 percent of the Indonesian rupiah.
It is also lower than the 9.2 percent appreciation of the Australian dollar and the 7.5 percent of the New Zealand dollar.
In terms of volatility, the peso was at 2.4 percent as of last Friday. While Thai baht was the highest in the region at 3.4 percent, excluding Japan’s 4.5 percent, and the lowest was Chinese yuan’s .95 percent.
At the same time, the Indonesian rupiah’s volatility stood at 1.6 percent, Taiwan dollar, 1.8 percent; Indian rupee, two percent; Singapore dollar, 2.9 percent, Korean won, 3.1 percent; and Malaysian ringgit, 3.3 percent.
Tetangco noted that “in relative terms we have not appreciated against the US dollar more than those currencies which means that in terms of relative strength of the peso it has remained more or less the same.”
“In fact, there is an improvement in competitiveness because the others appreciated faster than the peso,” he said.
Tetangco said short-term factor that may affect the direction of the local unit is the capital flows.
As of November 12, 2010, foreign portfolio investments recorded a net inflow of US$ 3.44 billion after total inflows reached nearly US$ 10.2 billion while outflows amounted to US$ 6.75 billion.
This net inflow is already ahead of the US$ 2.9 billion projection of the central bank for the whole year.
Emerging economies (EMs) like the Philippines are now enjoying strong capital flows due to uncertainty in the growth path of major economies.
Tetangco said the long-term factors include the domestic economic performance as well as the macroeconomic condition.
“If you have good macroeconomic performance the tendency is for your currency to appreciate,” he added.*PNA
