Fil C. Sionil
The peso soared to a new peak in seven and a half years of P42.27 yesterday against the weak US dollar on the back of the combined effects of the avalanche in dollar remittances from overseas Filipino workers (OFWs) and banks unloading their holdings of the American currency.
The new 90-month intra-day high broke the June 5, 2000 closing rate of P42.32.
Forex (foreign exchange) practitioners took a unified view that the strength of the local currency was not only brought about by the overall market sentiment of a weaker dollar but more so because of the heavy OFW remittances that will continue running up to the Christmas holiday.
The dollar selling of banks and other financial institutions, mostly domestic lenders, added up to the renewed strength of the peso, they said.
"Most local banks took a long dollar position before the spot close Thursday as a cushion since the Manila Pen siege was still unresolved then," a treasury official of a foreign bank said.
With the quick resolution of the Trillanes incident coupled by the "overall weakness of the US dollar still arising from the sub-prime related apprehensions, banks who were long reinstated their short position," the bank source explained.
This reinstatement of position injected additional vigor to the local currency when the spot currency market resumed yesterday, opening higher at P42.55, a good 20 centavos stronger from Thursday’s close of P42.75.
What followed was heavy dollar selling that pushed the local currency to trade between P42.27 and P42.31.
"The three-day long weekend caused the accumulation of dollar remittances, pumping additional adrenalin to the local currency," a forex trader of a domestic bank, whose institution is one of the biggest remittance player in the country.
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