The dollar closed Friday at PHP50.59 on the spot market. The economic market research unit of Singapore's DBS Bank said even if Arroyo's coalition wins, the peso is likely to stay weak against the dollar until July. Philippine Central Bank Governor Rafael Buenaventura told Dow Jones Newswires that peaceful elections will enable the peso to maintain its stability of recent trading days. Along with manageable inflation, stability in the peso market is essential for the central bank to continue bringing down its key interest rates to stimulate the economy. Since December, the bank has cut 550 basis points from its overnight rates, but this hasn't spurred the hoped-for credit growth to bolster the economy.
Banks remain reluctant lenders, while demand for loans remains subdued.
Growth is expected to flag mainly on a sharp weakening in exports due to a slowdown in the U.S. and Japan and a global slump in technology products. Inc. All Rights Reserved. All rights reserved.