Peso continues to weaken on consolidation
THE PESO further declined against the dollar for a fourth straight day amid consolidation and as market players remain on the lookout for economic developments.
The peso closed at P49.83 against the greenback on Thursday, dropping by 10.5 centavos from its P49.725 finish on Wednesday.
The local currency opened yesterday’s session at P49.80 versus the foreign currency, while its best showing for the day was seen at P49.77 per dollar. Its intraday trough was at P49.87 against the greenback.
Dollars traded jumped to $582.3 million on Thursday from the $436.5 million that changed hands the previous session.
“The dollar closed higher after the peso eventually appreciated last week when it hit a low of P49.40, which somehow became the support level,” one trader said in a phone interview.
“[T]here’s been some demand for dollars. At the same time the rally in the stock market seemed to be stalling and there’s also some net foreign sell-off that added to the demand for dollars, so I guess that caused slight weakness at its close,” the trader added.
The trader said geopolitical noise abroad has simmered down and the dollar’s strength against the peso is more of a consolidation.
“Barring any external forces, there’s really no news that could have caused the dollar to go higher,” the trader said.
In contrast, another trader said the dollar’s appreciation against the peso was still due to safe- haven buying amid geopolitical concerns in France and tensions between the United States and North Korea.
Asked how the peso fared against its regional peers, the trader said even other Asian currencies just traded sideways against the dollar.
“So technically investors are just waiting since there’s no economic data to trigger the market. They’re waiting what the outcome will be on the French election and how the tension between North Korea and the US will develop,” the trader noted.
For Friday, one trader sees the peso playing between P49.60 and P49.90 against the dollar while the other trader said the pair may trade within P49.70 to P49.90.
Most other Asian currencies also fell on Thursday, as traders pared back bets ahead of the French presidential election, while weak US data, and tensions around the North Korea conflict added to uncertainty.
France’s presidential election is being closely watched as the stakes for investors are high, with two anti-European Union, antieuro candidates among the four seen still in contention to make it to a second round two weeks after Sunday’s ballot.
The dollar index further weighed on emerging market currencies, creeping up by just 0.06% in Asian trading on Thursday, against a basket of six major rivals.
The Malaysian ringgit fell 0.02% versus the US dollar, while the Taiwan dollar dropped to 30.423 ahead of export orders data.