By Joann Santiago
MANILA, (PNA) — Deutsche Bank ING sees the peso showing its strength against the dollar as this year ends at 42.8 from the previous projection of 43.5.
ING chief economist for Asia Tim Condon said hot money inflows is partly expected to boost the local currency’s appreciation at the last quarter of 2013.
He said the local currency is expected to benefit from the expected rise of the local bourse.
”We expect the PSEi (Philippine Stock Exchange index) to claw back most of its May-August losses in the fourth quarter,” he said noting that “it’s up a league-leading four percent so far in October.”
The losses in both the local stock market and the peso in the second to third quarter this year was due to the expectations that the Federal Reserve will start scaling back its stimulus program by September this year.
However, the widely expected cut did not materialize during the Federal Open Market Committee (FOMC) policy meeting last September after US monetary officials noted that positive economic developments in the US are not enough to scale back the US$ 85 billion monthly bond-buying program.
The developments in the US are the main culprits for the performance of both the local bourse and the peso in recent weeks.
On Monday, the PSEi shed 0.73 percent or 47.10 points to 6,442.700.
This is among the factors for the peso’s performance during the day. However, the local unit remained firm against the greenback after closing at 43.15 from last Friday’s 43.13.
Another factor that fuels the peso’s strength in the last quarter of the year is the inflows from overseas Filipinos vis-à-vis the holiday season.