Amroussi Rasul, first vice-president and regional head for Middle East and North Africa, Philippine National Bank (PNB), expressed confidence that the Bangko Sentral ng Pilipinas (Central Bank of the Philippines), or BSP, would resort to currency controls although other analysts thought otherwise.

"I am sure that the BSP would intervene to meet the demand for more pesos because it was worried about the sharp appreciation of our currency against the US dollar," he said. "A peso rising too fast against the US dollar is risky to the market as it will increase volatility."

Rasul said this is a real problem to the more than 10 million OFWs worldwide, as most of them send the same amount of allotment to their families back home. "Our OFWs here in Dubai, for instance, will have to spend more dirhams for their fixed remittances sent on a regular basis."

BSP has announced that remittances from Dubai OFWs jumped 76.48 per cent to Dh534.44 million during the first five months of the year from Dh302.84 million for the same period last year. Total remittances by OFWs in the Middle East rose 48.64 per cent to Dh3.57 billion from Dh2.4 billion for the same quoted period.

Rasul said it would be worth for the OFWs to hold on to their dirhams or dollars "at least those who can afford to do so" because the peso would start depreciating against the dollar and, thus, against the dirham, towards the beginning of the last quarter, when importers order large quantity of goods in preparation for the Christmas season.

The dirham's value of 3.68 against the US dollar has not changed for at least the past 15 years, according to Sally Cortez, manager of Al Fardan Exchange in Bur Dubai, in an earlier interview. The peso became the second-best performing currency in Asia against the US dollar since the start of the year, prompting it to appreciate around eight per cent against the dirham. It has risen 9.44 per cent against the dollar as of July 20, trailing the Indian rupee that rose 9.76 per cent.

On July 20 the peso, boosted by foreign inflows into share offers by companies in the Philippines, breached the 45-level against the dollar at 44.80 and had the BSP worried.

Filipino traders said the peso was also buoyed by comments made earlier by Finance Secretary Margarito Teves that the Philippine currency would rise further due to strong macroeconomic fundamentals. But he ruled out any form of currency controls, a statement that further fuelled the bullish sentiment. 

Aboitiz Power Corp. last week raised $221 million in the biggest initial public offering (IPO) in the Philippines so far this year while GMA Network Inc., the country's second most popular broadcasting channel, is seen to raise $170 million in an IPO this month, and property developer Vista Land & Lifescapes will soon have a share issue of $459 million. Rasul noted, however, that the peso has begun appreciating strongly against the dollar right after the senatorial and local elections on May 11.

This means, he said, that politicians and their supporters had flooded the country with campaign funds that were stashed in the form of dollars in various banks abroad.

Khaleej Times reported earlier that the peso first breached the 13-mark against the dirham on May 10, appreciating to 12.74 and then depreciating to 12.76 the following day.

The exchange rates being followed were those used by PNB, the only Philippine bank which has a representative office in Dubai, and Equitable PCIBank and Rizal Commercial Banking Corp., two of the other banks that have tie-ups with some foreign exchange centres in the UAE.