Growth in the $225 billion economy will probably reach the high end of an official forecast for an expansion of 5 percent to 6 percent this year, Economic Planning Secretary Arsenio Balisacan said yesterday. GDP increased 5.9 percent in the three months through June from a year earlier, compared with a 5.5 percent gain predicted by analysts in a Bloomberg survey, according to official figures released Aug. 30.
Philippine economic fundamentals remain strong and will continue to attract investments, Should global policy makers boost efforts to spur growth, “investors will favor countries with the best prospects and that will include the Philippines.
The peso gained 0.3 percent friday to close at 42.085 per dollar in Manila, data from Tullett Prebon Plc show. It fell 0.8 percent this month, the worst performance since May. One-month implied volatility, which measures exchange-rate swings used to price options, fell 20 basis points today to 6.10 percent, according to data compiled by Bloomberg.
The government will boost spending to fund rebuilding of structures damaged by floods earlier this month, and that will further support the economy.
Bangko Sentral ng Pilipinas will review the stance of policy, and calibrate any further action” after considering the impact of increased public spending and the global demand slowdown, Governor Amando Tetangco wrote in a mobile-phone message yesterday. Policy makers meet next on Sept. 13.
The central bank may keep the overnight borrowing rate at a record-low 3.75 percent for the rest of the year and will favor prudential measures to manage inflows, Tanuwidjaja said. The peso may strengthen to 41.80 by year-end, he predicted.
The yield on the 12.75 percent bonds due July 2014 rose three basis points, or 0.03 percentage point, to 2.98 percent, according to midday fixing prices at Philippine Dealing & Exchange Corp. The rate was 2.94 percent at the end of July.
Data from the BSP showed that in July, transactions in forwards and futures in foreign currencies amounted to $4.85 billion, 37.3 percent or $2.88 billion lower compared to the transactions in June of $7.74 billion. In the same period last year, the central bank was hoarding $15.9 billion in forwards and futures in foreign currencies.
Forwards or futures as derivative instruments are used as defensive approach when a market is volatile and when there is a financial and economic crisis.
Based on the July data, the BSP’s long positions include $2.22-billion maturity of one month and $2.63 billion three months, however the three months to one year maturity has been wiped out clean. Last June, the one-year maturity amounted to $400 million.
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