Peso ‘least volatile’ Asian currency even with dollar inflows for Sendong victims

The peso was the "least volatile" Asian currency over the past year, appreciating by only 0.07 percent against the US dollar, according to the Bangko Sentral ng Pilipinas (BSP), which said the balance of payments (BOP) surplus will reach $10 billion for 2011, aided by remittances, including a surge of emergency funds for Sendong victims and the usual pamasko sent by loved ones overseas.   BSP Governor Amando Tetangco Jr. said on Thursday the stability of the Philippine peso has helped make the country’s exports more competitive. The BSP in past policy statements had vowed to “smoothen” the fluctuation of the peso-dollar exchange rate so businesses and dependents of overseas Filipinos sending remittances can be assured of predictability in their finances.   Whenever there have been unusual fluctuations in the exchange rate of the peso against the dollar, the BSP intervenes in the market, which sometimes meant buying up dollars to temper the surges of inflows. This week at the Philippine Dealing System, the peso rose against the dollar and closed at P43.47 to US$1.00 from P43.64 to US$1.00 the day before. The peso started the year on January 3 at P43.811 to US$1.00, according to the BSP. Merchandise exports in the first three quarters of this year totaled $41.29 billion, which is 4.3 percent lower than 2010 exports, according to the National Statistics Office (NSO), on account of weak global demand. Overseas Pinoys remit $16.53 B, BPOs earn $7.9 B   Those surges have come from overseas Filipinos’ remittances, earnings of business process outsourcing (BPO) firms, and foreign investments in shares of stock and government securities. Net portfolio inflows from January to September was $5.6 billion—more than 13 times the $423 million net inflows in the previous year.   Remittances last October hit a new monthly record of $1.77 billion and brought the 10-month total to $16.53 billion, which is 7 percent higher than the January-October sum in 2010, when the full-year total hit $18.76 billion. "Export receipts from BPO-related transactions totaled $7.9 billion in the first nine months of 2011," the BSP said earlier this week.   First Metro Investment Corp. and the Capital Markets Research unit of the University of Asia and the Pacific have forecast remittances this year to be 6–8 percent higher than the level of 2010. That’s a range of $19.88 billion to $20.26 billion.   FMIC and UA&P noted that the slower appreciation of the peso helps translates to higher peso equivalent of dollar earnings of dependents of overseas Filipinos (OFs). They have also observed that when the peso appreciates sharply, OFs send more dollars home to compensate for the peso’s rise. Remittances peaking   Historically, the remittance levels post their biggest gains in the last three months of the year—often peaking in December because of the Christmas season.   “The higher level of remittances in October could also be due to higher cash transfers by OFs to their beneficiaries who were affected by typhoons Quiel and Pedring that occurred in the latter part of September 2011,” the BSP added. BSP Deputy Governor Diwa Guinigundo said earlier this week that Northern Mindanao has its share of dependents of overseas Filipinos. "Nakita natin nagkaroon ng calamity sa Mindanao...Normally pagka may ganyang calamity 'yung mga overseas workers will try to provide some assistance to their family members. I'm sure 'yung area na iyon they have their share of overseas workers (deployed)," Guinigundo saId.  Disaster relief groups and agencies have asked OFs to send donations through the banks and other formal channels. — ELR/HS, GMA News