interest rates

The Daily Roundup: 28 January 2011

Tetangco given second 6-year term as BSP governor | Inquirer
MANILA, Philippines—President Aquino has given Bangko Sentral ng Pilipinas Governor Amando Tetangco a new six-year term after the end of his current tenure in July, Presidential Spokesperson Edwin Lacierda said Thursday night.

Fed gives BSP room on rates | BusinessWorld

THE US FEDERAL RESERVE’S decision to maintain its policy rate at near zero supports the Bangko Sentral ng Pilipinas’ (BSP) current stance of keeping its own rates at a record low, the central bank chief yesterday said. “The Fed move relieves some pressure off the consensus that has been building up that the US economy is at a pace of recovery which may lead the Fed to change its policy stance, and the effect of such development on inflation expectations and portfolio rebalancing out of EMs (emerging markets),” BSP Governor Amando M. Tetangco, Jr. said in a text message yesterday.

US monetary authorities cautious on recovery | BusinessWorld

Inflation fears overblown | BusinessWorld

‘P50-M send-off gift for Reyes’

Colonel explodes bombshell in Senate | Inquirer

MANILA, Philippines—A retired lieutenant colonel on Thursday made a surprise appearance at the Senate and disclosed how he and his ex-bosses allegedly amassed wealth, with a large portion of the loot taken from soldiers’ salaries.

Angie: I’ve never been corrupt | Philippine Star

Massive corruption in AFP traced | Malaya

No need for Palace to draft new RH bill–Lagman | Inquirer
MANILA, Philippines—There is really no need for Malacañang to draft a new responsible parenthood bill for endorsement to Congress as a consolidated bill with identical provisions is now on third and final reading at the House of Representatives, according to Minority Leader Edcel Lagman.

Witnesses recall death fall from Makati building | ABS-CBN News

MAKATI CITY, Philippines – Images of human bodies bent and broken like ragdolls are haunting witnesses and emergency workers who were among the first to respond to a construction site accident in Makati City on Thursday.

Economic officials head for Japan to pitch projects | BusinessWorld

ECONOMIC OFFICIALS will leave for Japan on Sunday in a bid to drum up interest in six key sectors pushed by the Aquino administration as well as promote public-private partnership (PPP) projects, officials said yesterday. Trade Secretary Gregory L. Domingo said he will be joined by Finance Sec. Cesar V. Purisima, Energy Sec. Jose Rene D. Almendras and a Bangko Sentral ng Pilipinas (BSP) official, who BSP Investor Relations Office Executive Director Claro P. Fernandez identified as Deputy Governor Diwa C. Guinigundo, on a visit to Japan from Jan. 30-Feb. 2.

Economy expected to grow by 5.2% in ’11

Hike in key rates may take place in Q4 | Inquirer

MANILA, Philippines – The global economic crisis is pushing more people into poverty, and the picture is even more grim in developing countries like the Philippines, according to the Asian Development Bank.

UN agency sets new guide in fight against high food prices | BusinessWorld

ROME — The UN’s food agency published a guide on Wednesday for policy makers in developing countries to help address negative impacts of high food prices but said there was no one solution for all countries effected. The Rome-based Food and Agriculture Organization (FAO) warned countries to carefully reflect before launching into policy actions that may appear useful in the short term but could be harmful in the long term.”The experience of the 2007-2008 food crisis shows that in some cases hastily taken decision by governments to mitigate the impact of the crisis have actually…aggravated its impact on food security,” Richard China, head of FAO’s Policy division, said in a statement.

Aquino says Filipinos’ innate talent fuels nation’s progress | Manila Bulletin

MANILA, Philippines, Jan. 27 (PNA) — President Benigno S. Aquino III cited the innate talent among Filipinos, particularly their creativity which, he said, fuels the progress of the nation. In his keynote address during the 13th Cycle Philippine Quality Awards (PQA) Conferment Ceremony on Thursday at the Rizal Hall of Malacañan Palace, the Chief Executive noted the Filipino workers’ natural talents that make them exceptional among others in the world.

Aquino should take opportunity for Charter change — Marcos | Manila Bulletin

By MARIO B. CASAYURANJanuary 27, 2011, 7:00pmMANILA, Philippines — President Benigno S. Aquino III has all the chances of seeing the 1987 Constitution amended during his six-year term with the people believing he is not personally interested in any changes after stating he won’t run for office again, according to Senator Ferdinand R. Marcos Jr.

Bishops will fight HIV, but won’t endorse condoms | Malaya

ARCHBISHOP Angel Lagdameo, president of the Catholic Bishops Conference of the Philippines, yesterday said the Church has told the United Nations Program on HIV/AIDS (UNAIDS) that it would be lending a hand in the fight against the disease by focusing mainly on the social aspect of the problem.

Snap, Crackle, Pop!

The media and blogosphere may have been mindlessly harping on the fumbling errors and bumbling missteps committed by the current administration of PNoy over the past six months in its first year in office, but the mood of the public and the markets seems to have taken it all in stride.

As latest polling by SWS reveals, PNoy and his policies continue to enjoy unprecedented confidence levels from the public. This exuberrant satisfaction is mirrored by the investor community which has driven the local bourse to all time highs following the normal transfer of power from one administration to the next during the middle of the year.

Despite its fiscal woes, the government very recently finds itself situated at a very auspicious moment in which it is able to borrow at very favorable terms. Its treasury issuance last month was oversubscribed four times leading to extremely low borrowing rates of just over three quarters of a percent for its 90-day treasury bill, nearly half what it was the previous month.

This makes it not far off from the yields of similar notes issued by the US Treasury and that of the UK, Eurozone and Japan! The governments of the struggling PIIGS economies of Portugal, Iceland, Ireland, Greece and Spain are having a much harder time raising funds to bridge their fiscal gaps having resorted to the IMF for credit while the Philippines exited from that program back in 2006 having paid all of its debts to the Fund in full.

With stellar economic growth predicted to hover around 6-7% per annum and a relatively benign inflation outlook predicted to continue over the next few years, the country is poised to take-off along with other emerging economies. The next decade could see the nation address some fundamental problems like infrastructure bottlenecks and social inequity if the government plays its cards right. Already the Gini coefficient a measure of income inequality reached its lowest point for quite some time.

What many will find most remarkable in all this is that there have hardly been any changes made to the socio-economic policy settings left behind by the previous administration despite all the campaign rhetoric about change. It could be seen as an acknowledgement that many of these settings prepared the conditions now evident for better times ahead.

As proof of this consider the following: the Conditional Cash Transfers program initiated in 2008 (CCT) is being expanded, the RH bill, which was drafted and vigorously pushed for in the previous Congress by the now leader of the opposition in the lower house and ally of the former president, is being supported, and reforms in education, training, research and development are continuing.

“Normalcy” restored

The boost in confidence has occurred because of the observance of the rule of law during and after the elections which led to a credible outcome. The political transition and stability this engendered has restored the notion of the Philippines as a “normal” state once again. The same transformation of perception occurred previously in Indonesia that led to it attaining G20 status (its recent setbacks notwithstanding).

Problems of corruption and conflict will still linger, but as was shown during the 90s under the Ramos administration, they can be tempered for as long as growth with equity is pursued (it should be noted here that it was during that previous period of expansion that poverty incidence as measured by the share of the poor to the overall population, fell to its lowest point since records were kept, and the country became relatively peaceful as a result, despite the fact that the poverty headcount, or the number of poor individuals kept rising-just not as fast as the rate at which the overall population grew, proving the point that equity is important).

What is crucial over the next six years is for the observance of good governance and the “market for rules” to be enforced. As demonstrated by two previous administrations, it is quite possible for political corruption and influence peddling to co-exist with an open market economy despite the enactment of “world-class” procurement laws and the application of electronic/automated processes in awarding government contracts.

The roll out of the PPP contracts beginning next year will be a litmus test as to whether the government can enter into such agreements without anomalous transactions occurring on the side. Another one will be the ongoing campaign to lift the tax take of the country which has not been buoyed by the recent recovery in economic activity.

With these key planks in place, the government will have sufficient funds to resource reforms in social policy arenas. Without them, an overall tax hike could loom as a distinct possibility which would threaten social cohesion particularly if an increase to the regressive VAT rate is pushed.

As the year draws to a close, it is worth considering the journey the country has taken. At the start of the year, there were doubts as to whether we would be faced with a doomsday scenario come election day. There were talks of civil unrest and military adventurism following a no-election or no-proclamation scenario.

At the close of the year, the country’s financial, economic and dare I say social outlook could not end at a brighter note. Indeed there is much cause to celebrate as the prospect for an economy that crackles and pops as opposed to one that merely sizzles but fizzles takes shape.

Peso closes at 2-year high of 43.88:$1

Peso closes at 2-year high of 43.88:$1
By Lawrence Agcaoili
The Philippine Star

MANILA, Philippines – The peso broke into the 43 to $1 territory yesterday, closing at a more than two-year high of 43.880 to $1 as the greenback remained under pressure after the US Federal Reserve decided to keep its benchmark interest rates at record lows but vowed to continue to supporting its fragile US economy.

The peso gained 12.50 centavos to close at 43.880 to $1 from Tuesday’s close of 44.005 to $1. The local currency opened stronger at 43.95 to $1 before closing at the day’s intraday high of 43.88 to the dollar.

This was its strongest level in 25 months or since it closed at 43.820 to $1 last Aug. 6, 2008.

Trade at the Philipping Dealing and Exchange Corp. remained brisk as $1.267 billion changed hands compared to $987.93 million last Tuesday.

Currency traders said in an interview that the US dollar fell sharply lower versus other currencies including the peso after the Federal Open Market Committee stated it was ready to provide stimuli for the US economy.

Traders said the US government printed more greenback in preparation for additional quantitative easing to address rising unemployment as well as falling prices.

The US Fed kept funds rate in the target range of zero to 0.25 percent “for an extended period” and maintained its policy of reinvesting principal payments from its securities holdings that it established in August.

The body said it would continue to ‘monitor the economic outlook and financial developments and is prepared to provide additional accommodation if needed to support the economic recovery and to return inflation, over time, to levels consistent with its mandate’.

Another trader said the Bangko Sentral ng Pilipinas (BSP) intervened in the foreign exchange market to smoothen the movement of the peso against the US dollar.

The trader pointed out that the central bank shelled out as much as $400 million to intervene in the forex market yesterday.

Had the BSP not intervened, the trader said the peso could have strengthened further to 43.75 to $1.