Peso weakens as stocks sink to new low intraday

THE PESO weakened against the dollar on Thursday as the local bourse dropped intraday.

The local currency ended at P52.10 versus the greenback, three centavos weaker than its P52.07per-dollar finish on Wednesday.

The local unit opened the session stronger at P52.05 against the dollar. It rose to as high as P52.025, while its worst showing stood at P52.12 versus the US currency.

Dollars traded rose to $654.45 million from the $ 502 million logged the previous session.

“The peso was still bound within the range of P51.95 and P52.15, but we saw corporate demand pushing it [ lower] that’s why we closed a bit [weaker],” a foreign exchange trader said in a phone interview yesterday.

The trader added that the dollar buying seen can also be attributed to the weakness of the local equities market.

The Philippine Stock Exchange index closed at 7,682.24 points yesterday, 1.42% lower than the previous close, as it plunged to a one-year low of 7,537.42 intraday.

“It went down 3% intraday, but it closed at 1.4%, so we saw some risk aversion in the local market [ yesterday], strengthening the dollar,” the trader added.

Ruben Carlo O. Asuncion, chief economist at UnionBank of the Philippines, shared the same sentiment, noting that the peso weakened despite the dollar’s decline.

Meanwhile, another trader said the peso weakened “following the release of upbeat US economic projections by the Federal Reserve.”

In its periodic “Beige Book” summary of contacts with businesses in its 12 regional districts, the Fed said the overall outlook among businesses “remained positive” as “robust” business borrowing, rising consumer spending and tight labor markets continue to spur the growth of the US economy, Reuters reported.

The Fed report, according to one trader, “prompted further foreign outflows in favor of the dollar.”

For today, traders see the peso moving between P52 and P52.20 against the dollar, while Mr. Asuncion expects continued weakness.

“I am expecting more of this weakness as [first quarter gross domestic product data] release nears, the anticipation of first quarter corporate results and the decision of the Bangko Sentral ng Pilipinas to [ hike or keep its interest rates],” he said.