Peso sinks to P49:$1
THE PESO plunged yesterday to breach the P49 level against the dollar, hitting a fresh eight-year low, due to heightened demand for the save haven unit amid uncertainties over policies to be imposed by US President-elect Donald Trump.
The peso ended at P49.20 against the greenback on Monday, 25 centavos weaker from its previous finish of P48.95 per dollar.
Yesterday’s finish was a fresh eight-year trough as it was the peso’s weakest close since it ended at P49.37 versus the greenback last Dec. 4, 2008. It is also the local unit’s new low for 2016.
The peso was traded weaker for the day, already breaching the P49 level as it opened the session lower at P49.01 against the dollar. It failed to regain hold of the P48-a-dollar range as its strongest intraday level was booked at just P49 before closing at its weakest point for the day.
Dollars traded decreased to $661.85 million from $707.5 million during the previous session, data from the Philippine Dealing & Exchange Corp. showed.
Traders attributed the performance to a stronger dollar in general following the new US president’s pronouncements on boosting infrastructure spending to drive the US economy, which meant widening inflation that will support the Federal Reserve’s plan of hiking interest rates by December.
“We saw the peso trading weaker against the dollar yesterday due to still Mr. Trump’s plan to boost spending because it’s going to be inflationary, and if that happens, the Fed will really hike interest rates,” a trader said in a phone interview yesterday.
The trader also cited Fed Vice Chair Stanley Fischer’s speech, in which he said that the monetary authority could proceed with its gradual increase in interest rates amid strong US economic fundamentals.
Another trader said “the pair could have traded higher but we think there was intervention… We suspect that regulators intervened to temper, normalize the market.”
The Bangko Sentral ng Pilipinas ( BSP) sometimes intervenes in currency trading to temper any sharp movements in the peso.
Another trader said: “[T]he peso also depreciated due to safe- haven buying among investors amid increased political uncertainty in the world’s largest economy.”
The trader added that the stock market’s weak finish also dragged the peso down.
Meanwhile, BSP Governor Amando M. Tetangco, Jr. told reporters yesterday that the peso’s weak performance was mainly due to the dollar’s strength.
“The other regional currencies also showed weakness [ yesterday] because the expectation of the market is the policies that are going to be adopted by the US government will likely lead to higher interest rates particularly Treasury rates, and as a result of that, capital flows are being moved towards the US. That’s regional, emerging market-wide,” he added.
For today, one trader sees the peso trading within the P49.15 to P49.30 range while the other trader said the pair might move between P49.30 and P49.90.
A third trader said the pair could even breach the P50 level, with the peso expected to go down to the P49.85 to P50 versus the greenback. •