Mar. 14--Bangko Sentral ng Pilipinas (BSP) Deputy Governor Diwa Guinigundo said the DBCC is set to revise upward its current peso to the dollar rate assumption of P45 to P48 for this year. This means the country's economic managers expect the local currency to further weaken against the greenback.

Guinigundo said the peso shoot past 48 to the dollar.

"The P45 to P48 is still in the broad order of magnitude. But still, we have to be realistic, closer to current configurations," he told reporters on the sidelines of the Chamber of Thrift Banks (CTB) convention.

"The cost effect of P48:$1 is actually an old assumption. The fact that the DBCC decided to increase the frequency of review of the macroeconomic assumption is a recognition that things are moving fast. And if our assumptions should remain realistic, we have to consider all of these," Guinigundo said.

The inter-agency DBCC revised its forecast for the country's gross domestic product (GDP) growth to 3.7 percent to 4.4 percent for this year, from the previous projection of 3.7 percent to 4.7 percent. A proxy for economic output, GDP is the amount of goods and services produce din a country.

BSP Governor Amando Tetangco Jr., said the central bank would continue to implement a market-determined exchange rate so long as the peso depreciates at a manageable level.

"Well, the peso also reacts to developments aboard. The policy is to allow it to move with market forces so the BSP only moves to minimize the volatility," he told reporters.

The governor said the peso is considered one of the least depreciated currencies in Asia so far this year, next to the Chinese Yuan.

"The volatility, aside from the rate of change, it is also manageable because it is towards the lower end of the volatility range," Tetangco said.

Guinigundo said the country's macroeconomic fundamentals continue to support the peso and its external accounts remain in surplus.

The BSP expects the country's balance of payments (BOP) to be in $700 million surplus for this year from the $88 million surplus last year.

The BOP summarizes a country's economic transactions with the rest of the world, with a deficit indicating dollar outflows exceeded inflows. Persistent deficits erode the country's gross international reserves, which in turn would raise inflation.

-----

To see more of The Manila Times, or to subscribe to the newspaper, go to http://www.manilatimes.net.

Copyright (c) 2009, The Manila Times, Philippines

Distributed by McClatchy-Tribune Information Services.

For reprints, email tmsreprints@permissionsgroup.com, call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA.

A service of YellowBrix, Inc.