Peso weakens to anew
The peso weakened yesterday to a sevenweek low of R50.08 to the US dollar during the day from a closing of R49.91 on Monday.
The peso has been lounging at the R49.90-levels for weeks and according to Bangko Sentral ng Pilipinas (BSP) Governor Amando M. Tetangco Jr., the “behavior of the US dollar (has been) affecting regional currencies” including the peso.
On Tuesday, following the US Federal Reserve’s hawkish stance on its monetary policy, regional currencies weakened further including the peso.
Tetangco reiterated that they “allow market forces to determine the rate. But if there are very sharp fluctuations, we may send signals to the market.”
The peso has been at R49.90 range since May 2, it depreciated to R50 on May 3, and back to R49.90 after a day. In the first two weeks of June, the local currency gained some ground at the R49.40 level before falling back to R49.90 this week.
A report by First Metro Investment Corp. and the University of Asia and the Pacific said the exchange rate in May still posted the strongest level in three months, ranging to R50.05 to the US dollar from R49.65, narrowing the volatility measure to 0.10 from 0.25 in April.
Based on its technical review, the peso’s “strength is temporary and that it will be under pressure and start to weaken in late second quarter.”
The report added: “The peso may have a respite from its depreciation bias for a month or two, but the weakness should resurface in the second half (of 2017) once the Fed raises its policy rate and the Trump administration carries out its spending plans especially in defense, domestic security and infrastructures (late second half).”