Peso 2nd slowest to recover from '97 crisis

The Philippine peso is the second slowest currency to recover from the regional financial slump that occurred roughly ten years ago, Singapore-based DBS Bank Ltd. said Tuesday. In its daily research note, DBS said the peso has only recovered 35 percent of the value it shed since the currency meltdown that hit the region a decade ago. This makes it the second worst "comeback currency" after the Taiwanese dollar. The Taiwanese dollar has recovered only 31.7 percent of its losses ten years ago. The lender said the Korean won was the fastest to recover, having regained 97.3 percent of the ground it lost during the regional financial crisis. DBS said the peso has underperformed despite being the “Darling of Asian Currencies" since 2005. This is due mostly to political uncertainties during the term of former President Joseph Estrada who was removed from office in 2001. “Surprisingly, the Philippine peso also underperformed, despite being the darling of foreign investors since 2005. This can be attributed to the political uncertainties during the final year of former President Estrada, which resulted in a further depreciation after the end of Asian crisis," the investment bank said. After the won, DBS said the Singaporean dollar was the second fastest to recover from the slump, as it has already regained 78.2 percent of its losses. Next is the Thai baht which has recovered 67.6 percent, the Indian rupee, 64.5 percent, and the Malaysian ringgit, 57.3 percent. DBS said the Indonesian rupiah was another underperformer, having regained only 48.7 percent of its losses. “It is difficult to believe that 10 years have passed since the start of the Asian financial crisis that started on July 2, 1997. For some, it’s probably more difficult to believe that Asia is once again the leading contributor to world growth," the investment bank said. Furthermore, DBS said the fiscal slippage early this year would likely take its toll on the peso. “Although we still like the peso, we believe that the fiscal story that supported it may have run its course. Looking ahead, further gains may need to be predicated on an investment story," DBS added. The Philippines incurred a budget deficit of P41.8 billion from January to May this year, or P5.1 wider than the programmed shortfall of P36.7 billion set for the period. The government hopes to trim the budget deficit to P63 billion or 0.9 percent of gross domestic product this year before moving on to a balanced budget at the end of 2008. - GMANews.TV