Peso slumps to fresh low
THE PESO continued to decline against the dollar on Thursday, hitting another fresh low in over a decade, amid heightened caution among investors ahead of US economic growth data and after it tracked the local bourse’s drop.
The local currency closed at P50.53 against the greenback yesterday, down by three centavos from its P50.50-per-dollar finish on Wednesday.
Yesterday’s exchange rate was another new low for the peso, as this is its weakest level in more than ten years or since it finished at P50.54 on Sept. 11, 2006.
The peso opened the session stronger at P50.43 per dollar while its intraday trough was seen at P50.575 against the greenback. Its peak for the day was at P50.38 to the dollar.
Dollars traded totalled $564.7 million on Thursday, plunging from the $1.279 billion that changed hands the previous session.
One trader attributed the weakening of the local currency against the greenback to corporate demand, particularly in the oil sector, as well as the slump of the Philippine Stock Exchange Index (PSEi).
“Basically, demand in the offshore market rose. We also saw oil demand rise, there was so much demand, and the local stock market also declined,” the trader said by phone on Thursday.
The PSEi ended in the red on Thursday at 7,788.06 points, sliding 0.88% or 69.12 points from Wednesday’s close.
Meanwhile, another trader said market players were on a wait-and-see mode ahead of US gross domestic product ( GDP) data set to be released overnight.
“The peso moved sideways today due to caution ahead of the US GDP growth data,” the trader said on Thursday, noting that the dollar “was still an upward bias due to the recent hawkish comments of Fed Yellen.”
US Federal Reserve Chair Janet L. Yellen on Tuesday reaffirmed her stance that the Fed would continue to hike rates gradually “to levels that are likely to remain quite low.”
After a series of Fed officials gave similarly hawkish comments last week, global investors are now pricing in around a 50% chance that the US regulator will tighten rates anew before 2017 ends.
For today, one trader said the exchange rate may settle within the P50.40 to P50.65 range, while the other trader said the peso may play within P50.50 to P50.60 to the dollar.
“The peso might depreciate due to expectations of an upward revision in US GDP growth,” one trader noted. —