Peso hits 42.73 to the dollar! WaaaahhhH!

By Doris Dumlao
Inquirer
Last updated 04:11pm (Mla time) 11/09/2007

MANILA, Philippines — The peso breached the crucial 43:$1 barrier on Friday on strong foreign exchange inflows and growing expectations of another interest rate cut by the United States Federal Reserve.

The local currency hit an intra-day high of 42.73 against the US dollar in morning trade, its strongest level since touching 42.63 on June 21, 2000.

“We’re looking at 42.50:$1 next week,” said Jonathan Ravelas, chief strategist at Banco de Oro–EPCI.

The fourth quarter is seasonally a strong season for overseas remittance inflows ahead of the Christmas season. On top of these remittances, the market is benefiting from a resurgence of foreign portfolio investments into the stock market.

A potential cut in interest rates by the US Fed in December is also expected to make high-yielding assets from emerging markets like the Philippines more attractive to offshore investors.

The peso, Asia’s best performing currency so far this year next to the Indian rupee, has so far gained by over 12 percent this year.