Peso weakens amid lack of leads

THE PESO continued to drop against the dollar on Wednesday, tracking the direction of its regional peers, as markets remained quiet amid the lack of major market movers.

The local currency weakened to P50.32 versus the dollar yesterday, dropping 13.5 centavos from its P50.185 finish last Tuesday.

The peso opened Wednesday’s session sharply weaker at P50.28 versus the foreign currency, while its intraday trough was seen at P50.33 per dollar. The local currency’s best showing for the day just was at P50.25 against the greenback.

Traders said the dollar extended its gains versus the peso yesterday as investors remained on the sidelines due to the lack of fresh leads to drive yesterday’s foreign exchange trading.

“The peso weakened following the movement of a stronger dollar across the region,” one trader said in a phone interview yesterday.

“This happened even though the dollar was generally weaker against major currencies. Early in the morning, we saw the US dollar against Asian currencies were all stronger, so that’s the only particular reason why the dollar strengthened against the peso,” the trader added.

The trader added that total volume of dollars traded rose on the back of corporate demand.

Dollars traded climbed on Wednesday to $381 million from the $289.5 million that changed hands the previous session.

Asked if there were any developments that contributed to the pair’s trading yesterday, the trader said on Wednesday, “Nothing much, I guess it’s just risk aversion also given movements last night in the US… There was a drop in equity markets, that’s probably why there’s still stronger dollar now.”

On a similar note, another trader said: “The pair is still in the same range. It was generally sideways trading, but within range.”

“There’s nothing much happening in the market and that’s pretty much expected,” the trader added.

For Thursday, one trader said peso may play between P50.20 and P50.40- to- the- dollar while the other trader sees the local unit moving within P50.05 to P50.40 against the greenback.

ASIAN UNITS DOWN

Doubts the Trump administration would be able to pass a new healthcare plan this week to replace “Obamacare,” let alone deliver promised tax cuts and corporate deregulation, dragged down Emerging Asian currencies on Wednesday.

Investors worried that a failed healthcare reform push would portend trouble for policy promises that have propelled financial markets in recent months.

“One thing we know for sure now is that there are no rubber stamps for [Donald J.] Trump’s agenda,” said Stephen Innes, senior trader at OANDA.

Asian stocks posted their biggest drop in two weeks on Wednesday, hitting regional currencies as investors pulled out of risk assets. The South Korean won and the Indian rupee, which were the major gainers over the past week, fell about a quarter of a percent each.

The Taiwan dollar also slipped, although China’s yuan bucked the regional trend after the People’s Bank of China set its trading midpoint at the strongest level this week.

Analysts said North Korea’s failed missile test on Wednesday had little if any effect on the South Korean won and other Asian currencies.

Asian equities and currencies have risen this year on improving economic data which has attracted risk-taking investors.

MSCI’s broadest index of Asia-Pacific shares outside Japan has risen nearly 12% this year, while currencies such as the South Korean won and the Taiwan dollar have gained more than 5% each.

But now doubts over the Trump administration’s ability to pull off big reforms has raised questions over whether Asian markets could still lure investors in a more risk-averse investment climate. —