three-time rotary club of manila journalism awardee 2006, 2010, 2012
U.N. Media Award 2008
BusinessMirror
www.businessmirror.com.ph
A broader look at today’s business
n Sunday, September 13, 2015 Vol. 10 No. 339
P25.00 nationwide | 4 sections 22 pages | 7 days a week
S&P predicts recovery of PHL currency
L
week ahead
ECONOMIC DATA PREVIEW PESO
n Previous week: The local currency continued to decline in value last week, hitting its trough at 46.93 to a dollar on Tuesday as investors continue to grapple with hard-hitting sentiment on the global economy, particularly on the uncertain growth story of China. In particular, the local currency opened trade on Monday at 46.92 to a dollar, and hit its lowest point of the week on Tuesday at 46.93 to a dollar. The peso then hit 46.855 to a dollar on Wednesday, and was barely unchanged on Thursday at 46.85 to a dollar. The peso ended the week at 46.89 to a dollar. The total traded volume is at $2.73 billion, while the average value of the peso is at 46.889 to a dollar during the week. This is weaker than the 46.722 average trade value of the peso in the previous week. n Week ahead: The peso is still likely to fall in value against the dollar in the coming week, economists said, owing largely to the uncertainties lingering from China and the upcoming meeting of the Federal Open Market Committee in the coming week.
By Bianca Cuaresma
OCAL consumers and economists shared mixed views on the possible direction of the local currency’s value in the near future, amid bouts of volatilities coming from uncertainties in the global front. In its latest commentary on Asia Pacific, Standard & Poor’s (S&P) expressed its outlook that the peso will likely recover from its near-47 value in recent weeks toward the end of the year. In particular, S&P said that
the peso is set to end the year at the level of 46 flat to a dollar—appreciating from its most recent level of 46.89 to a dollar on Friday. However, in the most recent survey conducted by the Bangko See “S&P,” A2
Cabangon Chua leads rites at blessing of giant Saint Rose of Lima statue FORMER Ambassador Antonio Cabangon Chua views the commemorative marker bearing a prayer to Saint Rose of Lima during the inauguration of the Santa Rosa de Lima Plaza at the Eternal Gardens in Santa Rosa, Laguna, on Saturday. ALYSA SALEN
BOP (August 2015) Friday, September 18 n July BOP: The country’s transactions with the rest of the world surpassed government expectations for the entire 2015 in as early as July this year, as the central bank reported in the previous month that the country’s balance of payments (BOP) position
See “Outlook,” A2
F
ORMER Ambassador Antonio Cabangon Chua, president emeritus of the ALC Group of Companies, made a surprise visit at the blessing of Santa Rosa de Lima Plaza at the Eternal Gardens in Santa Rosa, Laguna, as an expression of gratitude to the saint for his
recovery from a recent ailment. In his speech, Cabangon Chua said the Peruvian saint is special to him, as the Feast of Saint Rose de Lima falls on his birthday. The plaza hosts a 14-foot statue of Saint Rose of Lima, the Continued on A2
U.S. oil production seen tumbling, but record-low prices may hold on
P
ARIS—Oil supply from the United States, Russia and other countries outside of the Organization of the Petroleum Exporting Countries (Opec) is expected to drop sharply next year—possibly the steepest decline since the Soviet Union collapsed—because of low prices, the International Energy Agency (IEA) forecast on Friday. In its latest monthly report, the IEA says non-Opec production is expected to drop nearly half a million barrels to 57.7 million barrels a day in 2016. But a prominent investment firm questions whether even a cut that steep will shrink the glut of oil on the market enough to boost the price. Amid booming US production and high Opec output, the benchmark price of oil plunged from over $100 last year to about $45 this week. Global oil demand has grown, but at a slower pace, and analysts have said big production cuts are needed to balance the market. Producers in the US, who need a higher price per barrel than Opec countries to break even, have started to cut back. The US Energy Department estimated this week that production fell by 140,000 per day in August. The decline is expected to widen in the coming months, and production should average 400,000 barrels a day less in 2016 than in 2015. Russian and North Sea supply is also forecast to shrink in 2016, according to the IEA. Overall, non-Opec production should drop the most since 1992, when non-Opec output shrank 1 million barrels after the Union of Soviet Socialist Republics fell apart. Low oil prices are also spark-
ing an increase in demand, the IEA said. With pump prices well below $3 a gallon in most states, gasoline demand in the US is at an eight-year high. The agency said demand in China is still growing, despite signs of economic weakness, as growing use of transportation fuels offsets lower industrial demand for crude oil. It forecast global oil demand would rise 1.7 million barrels a day this
year, the highest in five years, and grow by another 1.4 million next year. The IEA does not provide a forecast for oil prices. In its report earlier this week, the US Energy Department said it expects US oil to average $49 per barrel this year and $54 per barrel in 2016, about $5 below the estimated average for Brent crude, the benchmark for many international types of crude. AP
BPI: Expect weak peso as uncertainty remains over Fed’s decision
B
SLAMMED! Serena Williams’s
Grand Slam chase ends with a semifinal exit at the US Open. Story on A10.
PI Asset Management sees a weaker peso versus the US dollar this coming week, brought by uncertainty over the US Federal Reserve’s (the Fed) decision to hike interest rates in its September Federal Open Market Committee (FOMC) meeting. Analysts at BPI Asset Management said that, at this point, the possibility of a rate hike in September is still uncertain, given mixed economic-data releases and the instability of markets across the globe.
PESO exchange rates n US 46.9260
“We expect the peso to continue falling vis-à-vis the US dollar as investors remain defensive ahead of the FOMC meeting—although a disappointing inflation print, coupled with no change in Federal Reserve policy rates, may allow the peso to partly rebound,” it said. In last Friday’s close, the peso continued to weaken as investors positioned cautiously ahead of the FOMC meeting next week. Week-on-week, the Philippine peso depreciated 16 centavos, or 0.34 percent
lower, to close at the 46.89 level. The peso started weak against the US dollar last week, breaching above 47 on Tuesday due to continued concerns over China, emerging markets and the timing of the Fed’s rate hike. Analysts said sentiment over China improved, which allowed the peso to recover some of its losses, but the spotlight turned to Brazil, whose foreign-currency rating was downgraded to “BB+” with negative outlook, as its fiscal position and
political system continued to deteriorate. The continuation of net foreign outflows prevented any significant rally of the local currency for most of the week. The Bangko Sentral data showed net foreign direct investments declined 30.9 percent to $383 million in the first half of 2015, from last year’s $554 million, predominantly on the back of investor sentiment anticipating a Fed rate hike and global concerns over China’s slowing economy. Net equity-capital investments com-
posed the majority of the components at $214 million, four times higher than the $54 million in the previous year. The BSP said net foreign outflows from stocks, bonds and deposit certificates continued for a sixth straight month in August. For the month, outflows reached $524 million, higher than the previous month’s read of $160 million. This resulted in a net foreign outflow position year-to date of $64.3 million. Genivi Factao
n japan 0.3888 n UK 72.5007 n HK 6.0550 n CHINA 7.3584 n singapore 33.2055 n australia 33.2384 n EU 52.9044 n SAUDI arabia 12.5159 Source: BSP (11 September 2015)