Tuesday, January 01, 2008

What's up with the Peso in the New Year?

If the first day of trading in a New Year is an indicator, then our Peso has much room to strengthen, which actually, was predicted by most Forex traders, locally and internationally. So, my advise is to follow the perception of the herd, but be careful.

I do not see the Peso going to 35. I even see it hover around 40"s for the whole year. I also see it weakening to 43 to 45 briefly to scare away speculators. I saw it happen with the US dollar years back, with the Euro, Yen and others. Be careful.

Anyway, on the news to day from PDI as reported by Reuters:

Most Asian currencies rose on Wednesday, starting the year on a firm note due to expectations of sustained capital inflows into the region and a faster rising Chinese yuan.

The peso backed by rising remittances from overseas workers, rose as far as 41.05 per dollar, up about 0.5 percent from Friday's close to its strongest level since mid-2000.

"I think peso bulls will continue to test the dollar's downside near term, particularly with the BSP (central bank) also rather receptive of the peso's appreciation as a tool to curb inflation," said Bank of America strategist Han Sia Yeo.


Watch out!