Peso slips as players reposition after Tuesday’s sharp increase

THE PESO ended almost flat against the dollar on Wednesday after most market players tweaked their positions following Tuesday’s sharp rise.

The local currency closed at P50.55 versus the greenback yesterday, slipping by two centavos from its P50.53-per-dollar finish on Tuesday.

The peso opened Wednesday’s session at P50.47 per dollar, close to its intraday peak of P50.45 versus the foreign currency. Its worst showing for the day was at P50.65-to-the-dollar.

Dollars traded amounted to $ 595.7 million, down from the $629.1 million logged the previous session.

One trader attributed the peso’s slight decline to the repositioning of some investors after the local unit’s large gain versus the dollar on Tuesday.

“The peso’s close was still pretty volatile… It opened lower then traded sharply higher because after some of the positions were washed out [ on Tuesday,] now they tried to reinstate it [ yesterday,]” the trader said by phone.

Last Tuesday, the peso ended sharply higher versus the dollar at P50.53, jumping 16.5 centavos from its P50.695-per-dollar finish on Monday, on the back of central bank intervention.

“From there, there were agent banks selling dollars that sort of capped the market close at P55 per dollar,” the trader added.

Asked if there were other factors that contributed to the pair’s trading on Wednesday, the trader said: “Basically the repositioning of some market players dictated the session.”

Meanwhile, another trader said by phone: “The dollar-peso rallied but was capped at the P50.65 per dollar low on renewed appetite for risk currencies with oil prices recovering.”

“[The other night,] we saw risk currencies rallying so it dragged the dollar, so there was pressure on the downside in favor of the peso,” the trader added.

For today, one trader sees the peso moving within P50.40P50.70 versus the dollar while the other trader said the exchange rate may settle between the P50.50 to P50.70 range.

Most Asian currencies were higher on Wednesday against the dollar, which was hit by new suggestions of Russian influence in the 2016 US presidential election and amid wider caution ahead of Federal Reserve chair Janet L. Yellen’s semi-annual congressional address.

The peso bucked the trend for the day as data showed that the Philippines posted its widest trade deficit in decades in May.

Jose Mario I. Cuyegkeng, senior economist at ING Bank N.V. Manila, said while the widening trade deficit can be viewed as positive from a domestic demand perspective, the currency may weaken further in the near-term owing to a further widening in the deficit.

“From a currency standpoint, until investors feel that imports work through the economy and push it to a higher growth path, then the market focus would be on the near term impact of a deterioration in balance of trade through a weaker exchange rate,” Mr. Cuyegkeng said.

Investors will now be looking at the next remittance report for an indication on whether structural inflows can mitigate the deterioration in the trade balance, he said.

The currencies of South Korea, Taiwan and Thailand all posted their biggest intraday percentage gains in at least a month as investors pared their greenback positions. The dollar index, which tracks the greenback against six major rivals, was 0.09% lower at 95.580 at 0540 GMT. —