Peso ends flat amid lack of leads
THE PESO traded flat against the greenback yesterday to retreat from its weakest level in a decade, with market players trying to break the P50-per-dollar level amid the Bangko Sentral ng Pilipinas’ (BSP) intervention.
The peso ended at P49.995 against the dollar on Wednesday, almost flat compared to its tenyear low finish of P49.999 versus the greenback in the previous session.
The local unit traded mostly sideways for the day after it opened the session at P49.97 against the greenback, while its intraday low was at P50. The peso’s strongest point for the day was logged at P49.95 a dollar.
Dollars traded on Wednesday totalled $421 million, higher than the $363.8 million that exchanged hands the previous session.
Traders said the peso generally moved sideways against the dollar, with the local unit just touching the P50 level as the market saw the central bank stepping in during yesterday’s session.
“The peso just moved sideways today likely because of BSP intervention. Investors were trying to breach the 50 level, but were met with strong resistance,” a trader said in an e-mail on Wednesday.
On a similar note, a trader said in a phone interview: “We just saw that the market was rangebound. The figure was also well offered as the figure was tested but it did not break the P50 level, it only touched it.”
The trader also said that the reason for the peso not breaching the P50 level was due to the BSP’s intervention in yesterday’s trading.
The BSP sometimes intervenes in the daily foreign exchange market in order to temper any sharp peso swings and maintain its stability.
Asked how the local unit performed against its regional peers, one trader said: “The peso was also in a sideways range against Asian currencies.”
For today, one trader sees the peso-dollar pair ranging within P49.90 to P50.10 while the other said that the peso may still move within P49.85 to P50.05 a dollar.
“There might still be sideways movement, although the pressure to break the 50 mark could be less due to bets of weaker US existing home sales data,” one trader noted.
Reuters reported that US home sales jumped in October jumped 2%, hitting a nine-and-ahalf years high driven by homebuyers amid an improving labor market and lower mortgage rates.
The South Korean won and the Thai baht hit multi-month lows against the dollar on Wednesday, weighed down by expectations of a faster pace of US interest rate increases after Donald Trump becomes president on Jan. 20.
The Thai baht hit a trough of 36.076, falling to levels last seen in January. The won touched 1,196.3 per dollar, its lowest level since March.
“But the problem is that it could lead to trouble if that (won weakness) were to be accompanied by fund outflows from bonds and equities,” he added.
Emerging Asian currencies have declined broadly since early November, as the dollar and US bond yields jumped on expectations that President-elect Donald J. Trump’s proposals for infrastructure spending and tax cuts will boost economic growth and inflation. Such rises in US bond yields can reduce the attractiveness of investing in emerging markets and trigger capital outflows from such countries.
Asian currencies have come under renewed pressure after the US Federal Reserve raised interest rates last week for the first time in a year, and also signalled three hikes in 2017.