Peso declines further vs dollar on geopolitical issues abroad

THE PESO slipped further against the dollar on Tuesday amid continued geopolitical concerns abroad.

The peso ended at P53.47 versus the greenback on Tuesday, weaker by three centavos from its P53.44- per- dollar finish the previous day.

The local unit opened the session slightly stronger at P53.43 against the greenback. It declined to as low as P53.50, while its intraday high stood at P53.35 versus the dollar.

Dollars traded rose to $748.82 million from the $449.2 million that switched hands on Monday.

In an interview, a trader said the peso depreciated as corporate demand for the US currency pushed peso lower.

“The peso depreciation was due to corporate flows,” the trader said over the phone on Tuesday.

“This is quite regular. Usually at the end of the month, you see oil firms buying dollars to repatriate their income.”

Meanwhile, Rizal Commercial Banking Corp. Economics and Industry Research Division Head Michael L. Ricafort said the peso closed lower on higher global oil prices.

“Dollar- peso closed at P53.47... on higher global oil price recently on some market expectations that actual OPEC (Organization of the Petroleum Exporting Countries) oil production hike may be below the agreed 1 million barrels per day,” he said in a text message.

“The peso again weakened today as increasing uncertainties of a possible trade war continue to rattle the markets,” another trader said on Tuesday.

According to RCBC’s Mr. Ricafort, China and the European Union warned that the persistent trade tensions could result in a global recession.

“[The uncertainties] prompted investors to seek for safe-haven currencies,” the second trader added.

Despite the depreciation of the local currency which may seem negative, First Metro Investment Corp. (FMIC) said its short- and mediumterm impact is “net positive.”

“Peso depreciation also has positive effects for the country. The most obvious effect of this would be to discourage imports and produce more exports,” FMIC and the University of Asia & the Pacific ( UA& P) said in a statement.

The production of more exports will boost employment generation and reduce the trade deficits over the medium term.

FMIC and UA& P added the weakness of the peso will boost the income of overseas Filipino workers (OFW).

“There are about 10 million OFWs, and with an average family size of 4.6, the peso slide benefits some 46 million Filipinos,” First Metro and UA&P added. “Add to that the number of families dependent on exports... we can easily conclude that a vast majority of Filipino families benefit from the higher peso-dollar exchange rate.”

For Wednesday, the first trader sees the peso moving between P53.40 and P53.60 versus the dollar, while RCBC’s Mr. Ricafort gave a P53.35- P53.50 forecast range.