Bangko Sentral reins in peso as govt realigns 2014 forex guidance

The peso weakened on Wednesday, pulled mainly by Bangko Sentral ng Pilipinas intervention while investors were sidelined ahead of US Federal Reserve Chairman Ben Bernanke's speech on July 17 to 18 in Washington.

Philippine economic managers unveiled a revised foreign exchange assumption for next year based on the local currency’s trend in the past months.

Revising an earlier assumption of P42 to P45 per dollar, the policy-setting Development Budget Coordination Committee assumed the peso-dollar to trade within 41 to 43 levels next year, Budget Secretary Florencio Abad said.

At the foreign exchange spot market, the peso shed nine centavos to 43.38:$1 at the close of trading from 43.29 Tuesday. Volume fell registered at $857 million from $1.207 billion Tuesday.

“The peso weakened mainly on artificially plotted bids by the BSP (Bangko Sentral ng Pilipinas), as investors were on the sidelines ahead of Bernanke's testimony,” a trader at a local bank said.

On Tuesday, poor retail sales in the US boosted the peso by 14 centavos in line with an uptrend in regional currencies, prompting central banks in region to buy dollars on Wednesday.

“Regional central banks were all intervening, resulting in gains for the dollar,” a second trader said in a separate interview.

Central bankers have been wary of volatility in currency markets caused by US data and Fed pronouncements that could provide hints of easing its quantitative stimulus.

Dollar buying by banks to “adjust positions” ahead of the Bernanke's speech was also observed in the afternoon, a third trader said.

Bangko Sentral Governor Amando Tetangco Jr. said the peso assumption for next year was in line with recent developments.

“We just realigned to the latest trend. It’s just an assumption, not a forecast. If you look at year-to-date average, it's well within that,” Tetangco noted in a statement Wednesday.

Citing a $75-million balance of payments position which indicates enough resources to settle trade and debt obligations, Bangko Sentral Deputy Governor Diwa Guinigundo said the local currency “is expected to further stabilize.”

VS, GMA News

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