Peso touches P50:$1 after martial law declaration

THE PESO continued to slide versus the greenback on Wednesday to hit its weakest level in nearly two months, briefly touching the P50-per-dollar level intraday, on the back of negative sentiment due to President Rodrigo R. Duterte’s declaration of martial law in the Mindanao region and political noise in the United Kingdom.

The local currency finished at P49.995 against the dollar yesterday, sliding by 17.5 centavos from its P49.82 close on Tuesday.

Wednesday’s finish was also the peso’s lowest level since it ended at P50.08- to- the- dollar last April 7, 2017.

The peso traded weaker the whole day after it opened the session at P49.95 versus the dollar, while its intraday trough was seen at P50. Its best showing for the day was at P49.93 to the dollar.

Dollars traded slightly increased to $ 582.4 million on Wednesday from the $572 million that changed hands in the previous session.

“The peso depreciated today as geopolitical concerns in the UK and the Philippines improved the dollar’s appeal as a safe-haven currency,” one trader said in an e-mail on Wednesday.

Mr. Duterte placed Mindanao under martial law on Tuesday night after government forces clashed with Islamic State (IS)inspired Maute group led by Isnilon Hapilon in Marawi City, Lanao del Sur.

Presidential Spokesperson Ernesto C. Abella made the announcement in a press conference in Moscow, saying that Mr. Duterte made the decision “as of 10 p.m.” after meeting advisers in Russia to discuss the situation in Marawi City. The declaration will last for 60 days and the formal proclamation “will be forthcoming.”

According to the trader, the local currency’s decline was tempered after the Bangko Sentral ng Pilipinas (BSP) intervened the foreign exchange market yesterday.

For his part, BSP Governor Amando M. Tetangco, Jr. told reporters on the sidelines of a media luncheon yesterday that the peso’s weakness against the dollar was due to the decline of its regional peers as well.

“As I have said there is some cautiousness and there is also legitimate corporate demand at the same time. So that affected the movement of the peso this morning... It remains stable,” Mr. Tetangco said ahead of the market’s close.

Asked if there’s a need for the BSP to intervene with the foreign exchange market, the central bank chief said, “Our policy is to allow market forces to determine the rate but if there are very sharp fluctuations, then we may send signals to the market.”

For today, one trader said the peso may play within P49.90 to P50.10 against the dollar while the other trader sees the pair trading on a wide range between P49.85 and P50.15 due to risk events today. The third trader said the local currency may move within P49.90 to P50.10-to-the-dollar. —