Businessmirror september 20, 2015

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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 20, 2015 Vol. 10 No. 346

P25.00 nationwide | 4 sections 20 pages | 7 days a week

Central bank pins hopes on remittances

T

By Bianca Cuaresma

HE Bangko Sentral ng Pilipinas (BSP) expressed confidence that the remittances from Filipino migrant workers will continue to support the local economy, amid recent sharp dips in the growth of volume of cash that hit below 1 percent in August. Guinigundo: “As the global economy continues to be weak, the demand for outsourcing will continue—because it will be beneficial for these foreign companies to outsource outsourceable services for them—and demand for Filipino services will continue to grow.”

week ahead

ECONOMIC DATA PREVIEW Peso n Previous week: The peso has seen a degree of correction and recovery in the previous week, as the Federal Reserve (the Fed) decided to keep its rates on hold in its latest meeting. The peso started trade at 46.735 to a dollar on Monday and 44.77 to a dollar on Tuesday. The peso started to recover on Wednesday at 46.65 to a dollar, appreciating by 12 centavos from the previous day’s trade. The peso then hit the 46.50 barrier to close trade at 46.44 to a dollar on Thursday, and continued to strengthen on Friday, when markets finally learned of unchanged policy rates from the Fed on Friday to close the market at 46.415 to a dollar. n Week ahead: The local currency is seen to continue its path to recovery in the coming weeks, as the Bangko Sentral confirmed that the local currency will likely see a recover in the near term due to the Fed’s decision. However, the BSP warned that, in the medium term, the volatilities may recur, as uncertainty still clouds the global economy, particularly the economies of the United States and China.

Monetary-policy Stance

September 24, Thursday n Previous stance: In its previous meeting, the Monetary Board decided to keep its monetarypolicy settings on hold on all levels, as inflation expectations remain low. Likewise, the BSP admitted in the last policy meeting that the inflation average for the year would fall below the target of 2 percent to 4 percent for 2015. n Upcoming policy: Several economists believe that the BSP will keep all its rates on hold once again this month. This is on the back of continued lower inflation regime, as well as the expectation of a growth uptick in recent years. The recent Fed decision also said to have given the BSP leeway to delay any movement in monetary policy further (See related story). Bianca Cuaresma

Japan passes bills to allow troops to fight overseas

In a recent media briefing, the BSP Deputy Governor for the Monetary Stability Sector, Diwa C. Guinigundo, said that the recent slowdown in remittances—most evident in the first eight months of this year— is a sign that the remittance business is reaching its so-called maturity stage. Guinigundo explained that See “Remittances,” A4

Start of new ticketing system in MRT Line 3 hits major snag Japanese Prime Minister Shinzo Abe leaves, after a censure motion against him filed by an opposition party was rejected during the upper house plenary diet session in Tokyo on Friday. The censure motion was filed by the opposition in their attempt to block contentious security bills that Abe’s ruling party is eager to get final approval by the upper house. The bills would ease restrictions on what the military can do, a highly sensitive issue in a country where many take pride in the postwar pacifist constitution. AP/Koji Sasahara

MRT commuters will have to go through this a little bit longer. ed davad

By Lorenz S. Marasigan

I

T seems that the private company tasked to roll out the new ticketing scheme in the country’s overhead railway systems is pressed for time to meet its target, with only a few

days left for it to completely install the facility in the Metro Rail Transit (MRT) Line 3. While passengers of the Light Rail Transit (LRT) Lines 1 and 2 start to fully use the new system, customers of the most congested railway line in the metropolis will have to suffer queues a little bit longer. See “Mrt,” A4

F

ACING down a summer of protests that sank his popularity to record lows, Prime Minister Shinzo Abe pushed through legislation allowing Japan to send troops to fight in overseas conflicts for the first time since World War II.

Parliament gave final passage of bills to allow the military to defend an ally under attack and take a bigger role in international peacekeeping. Abe says the measures will improve deterrence and protect the nation from growing regional threats. For critics, the bills could end

seven decades of pacifism and risk drawing Japan into US-led conflicts. Thousands of people have been demonstrating in the rain outside parliament against the bills this week, and opposition lawmakers used stall tactics to delay their passage. China was

quick to respond to the outcome in a statement urging Japan to learn lesson from history and make efforts to promote regional peace and stability. Abe prevailed, tapping his coalition’s commanding majority Continued on A4

Economists see no change in monetary policy E

CONOMISTS see a repeat of the August Monetary Board (MB) meeting when it meets on Thursday, since the current monetary policy remains appropriate and inflation is still seen to fall below target for the year. The MB is seen to keep all rates steady at 6 percent for the repurchase rate and 4 percent for the reverse repurchase rate, as well as special deposit accounts interest rate at 2.5 percent and an unchanged reserve requirement ratio. This, amid recent developments in

PESO exchange rates n US 46.5170

the local and international market—such as the improved, but still anemic, growth reported in the second quarter of the year, as well as the recent decision of the Federal Reserve (the Fed) to keep its interest rates steady for the time being. Economists are of the view that, with the improved growth in the second quarter of the year, economic expansion is seen to continue until the third quarter, proving that the economy does not need any additional stimulus from the Bangko Sentral. “Growth is seen to rebound in the

third quarter, with domestic spending picking up and domestic activity accelerating with election fever coming into play,” Bank of the Philippine Islands research officer Nicholas Mapa said. “Domestic growth remains robust, which does not support the case for rate cuts in our view,” Standard Chartered economist Jeff Ng said. Parallel to the expectation of higher growth in the third quarter of the year is also the anticipation that inflation will start to pick up in the fourth quarter of the year.

“Inflation is also likely to rebound, after slowing to record-low levels in recent months,” Ng added, while ING Bank Manila economist Joey Cuyegkeng said that the low-inflation environment delivers monetary leeway to keep policy rates low. Despite this, BDO Unibank Inc. chief market strategist Jonathan Ravelas, as well as Security Bank economist Patrick Ella, sees inflation to average below the government’s 2-percent to 4-percent target range for the year, with forecasts of 1.5 percent and 1.7 percent, respectively.

The Fed decision to hold also is seen to give the central bank more policy space to keep rates on hold. “The Fed’s decision to hold steady initially added financial-market volatility, but this has calmed, and, all in all, I don’t think it will sway the central bank one way or another,” Moody’s Analytics Economist Katrina Ell said. All six economists forecast a nochange in policy in the upcoming meeting on September 24. Bianca Cuaresma

n japan 0.3876 n UK 72.4921 n HK 6.0025 n CHINA 7.3071 n singapore 33.2787 n australia 33.2359 n EU 53.1364 n SAUDI arabia 12.4082 Source: BSP (18 September 2015)


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