Peso declines as govt says dollar supply stays tight

(Updated) MANILA, Philippines - The Philippine peso posted a slightly lower value on Monday as financial regulators observed a “tight" supply of dollars, the currency primarily used to pay for the country’s imports. The peso neared the P47 territory, slipping 24.5 centavos at P46.99 to a dollar, which got a boost after Washington approved a package injecting additional credit to the markets of the world’s largest economy. “It is more of a strong dollar scenario in the global market. The bailout has been technically, theoretically approved that’s why we saw even other major currencies strengthening," said Oliver Jimeno, China Trust (Philippines) Commercial Banking Corp. vice president. The peso traded within the range of P46.75 to P46.99 during the day. Trading volume was slightly better at $664.6 million from a lackluster exchange of $559.5 million worth of currencies on September 26. However, Jimeno said that the dollar’s strength remains mainly “news driven," adding that the US crisis makes this “one of the very volatile times for currencies." Dollar supply tightens as banks assess credit standards For its part, the Bangko Sentral ng Pilipinas (BSP) noted a tight dollar supply on Monday. However, the Philippines’ central monetary body clarified that the situation was not as harsh as those observed in other countries. The foreign exchange swap market “has been under some pressure for the past two weeks" because domestic lenders and foreign banks’ branches are re-assessing their credit standards, BSP Governor Amando M. Tetangco Jr said. Local financial institutions are closely monitoring their dollar positions, leading to “some tightness" in supply, Tetangco added. “There is ample US dollar liquidity in our system," Tetangco said. “The market may be experiencing some friction lately in terms of distribution, but I believe the market would be able to sort this out." He also said that the BSP “continues to be in both the spot and swap foreign exchange markets, as part of its normal operations to help smoothen volatilities in the exchange rate." Dollar reserves remain sufficient Speaking before the Senate Committee on Banks, Financial Institutions and Currencies, Tetangco said the country still has a “foreign exchange surplus." “The external liquidity position of the country remains comfortable and would be sufficient to cover our usual requirements," he said. Besides investments from abroad, the Philippines continues to source foreign exchange from money sent home by Filipinos working overseas including profits earned from the country’s exports, Tetangco said. In a separate report, National and Economic Development Authority Director Dennis Arroyo said that Filipinos working in the US are in occupations “which are not prone to recession." “They are in education and healthcare," he said. While Filipinos affected by the slowdown may send less money home, the lack is still expected to be offset by overseas workers in oil-producing countries, Arroyo said. - GMANews.TV