Peso weakens in quiet trading
THE PESO weakened anew versus the dollar yesterday as market players remained on the sidelines amid the holiday season as well as safe-haven buying on the back of geopolitical tensions between the United States and China.
The peso closed at P49.96 against the greenback on Monday, four centavos lower compared to its P49.92 finish on Friday.
The local unit opened the session at P49.88 against the greenback, which was also its strongest level for the day. It touched a low of P49.975 before trading ended.
“The pair’s trading is just the same as the previous day, the pair has just been consolidating in a tight range and we saw limited volume. I think most traders are on the sidelines or have stopped trading for the year, that’s why we’re trading at a lower volume,” a trader said in a phone interview on Monday.
Dollars traded on Monday totalled $310.6 million, fewer than the $347.2 million that exchanged hands the previous session.
“[ Yesterday’s] volume was one of the lowest volumes for the month. For the entire week we expect volume to be lower.”
“Most banks are done of the year, since most likely they have stopped trading to protect their income. If ever there is any trading it’s for corporate demand, and if there’s a flow, they will just immediately sell it,” the trader said.
Another trader said via phone: “We saw sideways trading for the pair as the market is quiet. I think the market’s tone will be like this for the rest of the year.”
Asked for the reason behind a quiet market in the last few weeks of the year, the trader said, “There’s lack of data and it’s the holiday season and despite the inflows, it will be offset by the market’s demand for the dollar.”
Overseas Filipino worker remittances usually peak in time for the Christmas season, as they send more money for the expenses of their families back home.
Meanwhile, another trader said in an e- mail on Monday: “The peso depreciated today due to safe- haven buying following squabbles between China and the US about a US drone discovered in the South China,” noting that “The impact of this geopolitical issue might temporary.”
Reuters reported that an American Navy underwater drone was seized on Friday by a Chinese Navy warship 12 miles from the limit of the coast of Subido — a part of the Philippines’ exclusive economic zone — in foreign waters in the South China Sea, to which China believed that the submersible was part of the surveillance efforts of US in the disputed waterway.
For today, two traders expect the peso- dollar pair to trade within P49.85 to P50.05, while the other sees the peso’s strong support to be at P49.90, with its resistance at P50.
Meanwhile, another trader said: “I suspect the monetary authorities to be there once the peso breaks the P50 figure,” noting that the local unit may breach P50 by yearend.