Peso closes at historic low 52.40 to dollar

Asian Economic News, Jan 22, 2001

MANILA, Jan. 15 Kyodo

The peso closed at a record low 52.400 to the dollar Monday as political uncertainties surrounding President Joseph Estrada's impeachment trial and the likelihood of further cuts in overnight interest rates put pressure on the Philippine currency.

The peso opened at 51.850 and traded between 51.830 to 52.400, at an average of 51.978 to the dollar, the Bankers Association of the Philippines said.

On Friday, the previous trading day, the peso closed at 51.590 after trading at an average 51.462.

Total volume of trades reached $134.13 million dollars Monday, up from $99.60 million traded Friday.

Effective Monday, the central bank cut its overnight rates by a further 0.50 percentage point, with borrowing rates now at 12.50% and lending rates at 14.75%.

The central bank has already made a total 250 basis points cut on its policy rates since Dec. 4, and announced it is mulling further cuts within the next four weeks.

Traders say the new cut in key policy rates would make dollar-denominated investments more attractive than peso-denominated investments.

On the political front, concerns Estrada may have enough supporters in the Senate impeachment court to obtain an acquittal on charges including bribery, graft and corruption are pulling the peso down.

Members of society and church leaders have warned of a ''people power'' revolt if Estrada is acquitted despite what they say is overwhelming evidence proving his guilt.