Peso slips as demand boosts greenback
THE PESO fell slightly yesterday amid strong demand for the dollar following mixed data out of the world’s largest economy.
The peso closed at P49.91 per dollar on Monday, a centavo weaker from its P49.90 finish last Friday.
The peso opened stronger at P49.85 against the greenback yesterday, even reaching an intraday peak of P49.805. Its low was logged at P49.93 against the greenback.
Dollars traded totalled $572.6 million yesterday, down from the $898.8 million that changed hand the previous session.
“It was relatively unchanged. There is still a lot of dollar buying sentiment here due to dollar demand,” a trader said in a phone interview yesterday.
The peso was trading stronger versus the dollar for most of the session following weaker- thanexpected US data released last week. However, demand for the greenback boosted the foreign unit.
“The reason for the gap down was because of the weaker US data on investor sentiment and weaker housing data…but still the market wanted to buy dollars on dips, that’s why we traded back to P49.90 at the close,” the trader said.
Guian Angelo S. Dumalagan, market economist at Land Bank of the Philippines ( Landbank), said in an e-mail:” Soft US reports on housing and consumer sentiment strengthened the peso in the morning session. The peso’s gain, however, was erased in the afternoon, as investors continued to digest the hawkish guidance of the US Federal Reserve last week.”
Amid a lack of strong catalysts, a trader said the peso will likely test the P50-per-dollar level today, with the market expected to flock to the dollar’s safety.
Another trader said the foreign exchange market may see a quiet week despite the Bangko Sentral ng Pilipinas’ (BSP) policy meeting this Thursday, as investors expect the regulator to keep rates unchanged.
A BusinessWorld poll last week showed ten out of 11 economists expect the BSP to stand pat on its policy stance, as the country’s domestic conditions show no compelling reason to adjust rates despite a hawkish Federal Reserve.
Landbank’s Mr. Dumalagan said the peso could continue to move sideways within the P49.80 to P50 range amid possible hawkish remarks by Fed officials in speeches scheduled overnight.
Meanwhile, most emerging Asian currencies edged up on Monday, with the Korean won leading gains as the dollar was subdued by questions over the strength of the US economy after weak economic data.
The dollar’s rally on the back of rising interest rates was tempered by a fall in US housing starts in May to the lowest in eight months and after a barometer of US consumer sentiment unexpectedly fell in early June. with