Peso closes at 2-month low on corporate dollar demand

THE PESO on Friday closed at its weakest level against the US dollar in nearly two months, weighed down by some corporate demand and rising political concerns ahead of the May 2004 elections, dealers said.

Dealers said the dollar outflows might have something to do with a purchase deal involving Globe Telecom Inc.'s shares.

The peso closed at 55.33 to the dollar after trading at a 55.20-55.40 range on volume of 145.20 million dollars. It closed at 55.240 on Thursday.

At the Philippine Stock Exchange, Globe Telecom's 12 million shares worth a total of 8.16 billion pesos were sold in several block transactions at 680 pesos each.

Early this week, Globe said it would close its deal to repurchase 12 million of its shares from Deutsche Telekom AG unit DeTeAsia Holdings GmbH Friday. The shares Globe bought back account for 7.9 percent of its total outstanding common shares.

Globe major shareholder Ayala Corp. will close a separate deal with DeTeAsia Holdings on the purchase of the latter's 10.03 million shares in Globe on October 30.

"Political uncertainties have also encouraged some market players to continue covering short positions ahead of the weekend, while those with month-end dollar requirements are buying days ahead," a commercial bank dealer said.

The dealer said the market had been wary about the prospects of actor Fernando Poe Jr. as a presidential candidate, as he is seen as a strong contender due to his mass appeal, notwithstanding his lack of experience in public service.

The dealer also believes the political environment has become more volatile following the impeachment of Supreme Court Chief Justice Hilario Davide Jr. by the House of Representatives, a move led by mostly members of the opposition block. The complaint stems from his alleged misuse of public funds.

Security concerns also weighed on the peso, with President Gloria Macapagal-Arroyo declaring the Jemaah Islamiyah (JI) the country's top security threat with a capability to sow far-reaching terror attacks, replacing local insurgent groups.

The statement came a day after Macapagal announced the arrest of Indonesian Taufek Refke, who is allegedly the JI's number two man in the south of the country.

Dealers said they did not see the central bank in the market. At around noon, the central bank said it was not planning to intervene in Friday's trading.

Central bank deputy governor Amado Tetangco Jr. attributed the peso's decline to higher dollar demand from companies rushing to complete month-end financing requirements, as well as to some short covering among banks.

"The political noise is not helping... It has been a cautious market," he added.

Still, the central bank remains optimistic the currency will settle at 54-54.50 against the dollar at the end of the year, as it expects strong dollar remittances from overseas Filipino workers during Christmas holidays.

"The market may test the 55.50 level next week and, if that is breached, we see a free fall and a possible test of the peso's record low (of 55.750)," the dealer said.

24/10/2003

Bron : Inq7.net

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