Peso falls after Fitch warning

The peso tumbled yesterday after touching the P50-to-the-dollar level on Tuesday but traders were optimistic that the local currency will be able to rebound once remittances from overseas Filipino workers start pouring in again. Traders said investors stayed on the sidelines after United Kingdom-based Fitch Ratings warned that the Philippines’ credit rating may be at risk amid the recent political turmoil that hit the country. The peso yesterday closed at P51.42 against the greenback, off by 36 centavos from Tuesday’s P51.06. It peaked the other day at P50.88. The local unit opened at P51.20 to the dollar and appreciated to as high as P51.17. It averaged at P51.31, weaker than Tuesday’s P50.963. Total trade fell to $613.5 million from $703 million. "Asia’s political backdrop had recently become less favorable for growth, with worrying developments in the Philippines, Thailand and Taiwan. Those sovereigns in the midst of political turmoil also have the weakest growth rates in Emerging Asia, and further downward revisions to the growth forecast may be necessary," Fitch Senior Director and Head of Asia Sovereigns James McCormack has said. Rovic de Guzman, head of trading at Union Bank of the Philippines said there was some "short-covering" in the US dollar yesterday. Two weeks ago, President Gloria Macapagal Arroyo placed the country under a state of national emergency claiming that an alliance of disgruntled military officials, former government officials and communists had tried to topple the government. The proclamation, which was lifted on Friday, had sent jitters to financial investors. Traders believe that the peso may still continue appreciating in the coming weeks as overseas Filipinos send more than the usual remittances in time for graduation season and ahead of the enrollment period. - Iris Cecilia C. Gonzales/BusinessWorld