Peso flirts with 51: $1 level

The peso flirted anew yesterday with the 51 to $1 level, shedding 17 centavos to close at its weakest level in almost 11 years due to the country’s weakening external payments position as well as the impending rising possibility of another rate hike in the US.

The local currency closed at 50.94 from Tuesday’s 50.77 to $1. It opened stronger at 50.75 and hit an intraday high of 50.73 but lost steam to touch an intraday low of 50.95.

This was the weakest level for the peso since it closed at 50.945 to $1 on Aug. 30, 2006.

Volume amounted to $523 million, lower than the $653 million recorded last Tuesday.

A trader said the peso is seen testing the 51 to $1 resistance level after the Bangko Sentral ng Pilipinas (BSP) reported the country’s balance of payments (BOP) position yielded a deficit of $569 million, the widest in seven months since the $1.67 billion shortfall booked in November last year.

This brought the shortfall to $706 mil- lion in the first half of the year, higher than the revised projection of the Bangko Sentral ng Pilipinas (BSP) at $500 million shortfall for this year.

Guian Angelo Dumalagan, market analyst at the Land Bank of the Philippines, said the peso is expected to move within the 50.80 to 51 range today due to the expected profit taking ahead of the likely hawkish European Central Bank monetary policy meeting.

Dumalagan said the peso has been depreciating against the dollar due to possibility of another US rate hike this year.

“Investors remain caution ahead of the US interest rate decision next week. In part, the peso also weakened likely because of expectations of more positive US data this week,” Dumalagan said.

The US central bank has raised key policy rates twice this year, one last March and another one last June.

BPI Asset Management said investors are cautious about a potential current account deficit scenario following a widerthan-anticipated trade deficit data released by the Philippine Statistics Authority.

It added the peso continues to slump against the greenback despite the dovish comments made by US Federal Reserve chair Janet Yellen.