Peso weakens further
THE PESO hit another 10-year low against the dollar on Tuesday on the back of heightened appetite for the greenback amid lingering uncertainties offshore, particularly on the US Federal Reserve’s planned rate hikes.
The local currency closed at P50.25 versus the greenback yesterday, its weakest in more than a decade or since it ended at P50.32a- dollar on Sept. 26, 2006. The peso also dropped two centavos from its P50.23-to-adollar finish on Monday.
The peso opened weaker at P50.30 per dollar and dropped to as low as P50.355 during the session. Its closing rate was also its peak for the day. Tuesday’s session saw less dollars traded, with total volume dropping to $578.5 million from the $723 million that changed hands during the previous session.
Traders attributed the peso’s continuous decline against the dollar to uncertainties in the market sparked by the Fed’s hawkish comments about raising borrowing costs next month.
Another trader said in an e-mail on Tuesday: “The peso depreciated today still because of external factors that made the dollar more appealing as a safe-haven currency.”
For his part, Bangko Sentral ng Pilipinas ( BSP) Governor Amando M. Tetangco, Jr. said in a text message to reporters after the peso opened at P50.30 against the dollar on Tuesday: “Our surveillance shows there is market demand to service legitimate dollar requirements and that’s moving the market.”
“There is also market positioning as some participants have a view on the USD. These are normally part of a healthy vibrant market. But this is not to say that we will stand back when we see that the movements are disruptive or excessive,” Mr. Tetangco added.
Meanwhile, Deputy Governor Diwa C. Guinigundo also said in a text message yesterday morning: “The peso continues to adjust to the uncertainty mostly in the global financial markets. While global economic recovery is a work in progress, the fallout from the US Fed interest rate hike and the populist sentiment in Europe could dent market sentiment and with it bring down regional currencies including the peso.”