Peso extends decline vs dollar
THE PESO continued to decline against the dollar yesterday following the release of local trade data for November, which further underscored the “weakness” in the country’s external payments position.
The local currency closed Wednesday’s session at P50.38 versus the greenback, losing nine centavos from its P50.29- perdollar finish on Wednesday.
The peso opened weaker at P50.35 versus the dollar. Its intraday low stood at P50.45, while its best showing was at P50.28 against the greenback.
Dollars traded climbed to $1.1 billion from the $ 917.2 million that changed hands on Tuesday.
“Forex ( foreign exchange) traders are looking at that particular data wherein the deficit is bigger than the previous one,” Ruben Carlo O. Asuncion, chief economist of UnionBank of the Philippines, said by phone.
Data from the Philippine Statistics Authority showed the country registered a trade deficit of $3.78 billion in November, wider than the $2.49 billion shortfall in a comparable year-ago period.
Jose Mario I. Cuyegkeng, senior economist of ING Bank, said the data “continues to indicate a strong economy,” considering raw materials import growth “remained high” while capital goods imports “recovered.”
UnionBank’s Mr. Asuncion shared the same sentiment, saying that the data is not worrisome.
“Personally, I’m not worried about it because it’s specifically an effect of a consumption- led economy driven to a more investment-led economy.”
However, Mr. Cuyegkeng noted that the “challenging” trade data, and, consequently, current account position, could pressure the local currency again this year.
“[Forex] market would be reminded of the weakness in external payments position with the November trade data,” he said, adding that the deficit will continue to offset remittances sent by overseas Filipinos.
Meanwhile, a trader noted: “I think it gave a little of a reason for the market players to buy dollarpeso as well, as we continue to see the trade balance worsen.”
For today, one trader said the peso may play within P50.25 to P50.55 against the dollar while the other trader sees the pair moving between P50.30 and P50.50. The third trader said the local currency may range from P50.30 to P50.60.
“The peso is seen to continue weakening amid bets of stronger US producer prices inflation to be released tomorrow, which is usually viewed to be likely indicative of consumer prices,” the second trader said.