Peso slips on political noise, Italy vote
THE PESO slid against the dollar yesterday amid political uncertainty on the local front following the resignation of Vice-President Maria Leonor “Leni” G. Robredo from the Cabinet and due to safe-haven buying after the outcome of the Italian referendum that meant the resignation of Prime Minister Matteo Renzi.
The local unit closed at P49.69 versus the dollar on Monday, four centavos weaker than its P49.65 finish in the Friday session.
The peso opened Monday’s session weaker at P49.72 against the greenback. Its intraday low was logged at P49.75, while its strongest level for the day was booked at P49.66 a dollar.
Dollars traded dropped to $334.4 million from the $ 602.5 million recorded on Friday, data from the Philippine Dealing & Exchange Corp. showed.
“We saw generally quiet trading for the day but the peso traded weaker because of the political noise that’s been happening here regarding [Ms. Robredo’s] resignation,” a trader said in a phone interview yesterday, referring to the Vice President’s resignation Sunday night from President Rodrigo R. Duterte’s Cabinet as chairperson of the Housing and Urban Development Coordinating Council (HUDCC.)
Ms. Robredo, who had chaired the HUDCC for barely five months, stepped down from her post after she received a text message on Saturday from Cabinet Secretary Leoncio B. Evasco, Jr. relaying Mr. Duterte’s instruction through Executive Assistant Christopher “Bong” Go for her “to desist from attending all Cabinet meetings” effective Monday, Dec. 5.
“This is the last straw, because it makes it impossible for me to perform my duties. Hence, I am tendering my resignation from the Cabinet on Monday, December 5, 2016,” Ms. Robredo said in a statement on Sunday.
Meanwhile, another trader said on Monday: “The peso depreciated today, as the Italian referendum results and Prime Minister Renzi’s subsequent resignation fuelled safe haven buying.”
“Upbeat US employment reports last Friday also helped strengthen the dollar,” the trader added.
Data released by US Labor Department over the weekend showed the US unemployment rate fell to 4.6% in November to hit a nine-year low since August 2007 as employers gained another 178,000 jobs last month, higher from the 142,000 jobs recorded in October.
For today, one trader sees the pair moving within the P49.60 to P49.80 range while the other trader expects the peso trading between P49.55 and P49.75 against the dollar.
“The peso might weaken anew [today] due to bets of strong US non manufacturing data,” one trader said.
Most emerging Asian currencies pulled back on Monday as Mr. Renzi said he would resign after suffering a crushing defeat on constitutional reform, tipping the country into political turmoil and threatening to destabilize its shaky banking system.
Malaysia’s ringgit edged up after the central bank on Friday announced fresh measures to stabilize the currency by boosting liquidity and encouraging more domestic trade of the unit.
The Singapore dollar fell 0.4%, leading losses among regional currencies on the euro’s tumble to a near two- year low. Mr. Renzi’s defeat deals a blow to the European Union already reeling under anti-establishment anger that caused the shock exit of the United Kingdom from the club in June this year. Taiwan’s dollar touched a 1-1/2-week trough on capital outflows.
“The Italian referendum dampened market sentiment as it raised political uncertainties and worries about Italian bank problems,” said Qi Gao, a foreign exchange strategist with Scotiabank in Singapore.