Peso to test 151:$1

The local currency weakened anew to P50.83 to the US dollar on Tuesday but regained strength to close at 150.70, giving a preview to further testing the 151 range. The peso opened at 150.73 and continued to be pressured to near 150.80 in both morning and afternoon trades. BDO Unibank’s chief market strategist Jonathan Ravelas said the peso weakened further despite an increase in overseas Filipinos’ foreign exchange transfers sent home as remittances for the first five months of the year. “Clearly its trading sideways within uptrend,” he said. Ravelas sees nearterm support at 150.40 to 150.50 levels. “Watch out for break above the 150.87 (high) as it could trigger a test towards the 151 levels.” BPI Asset Management in its daily market review said market players “continued to digest the wider-than-expected trade deficit print.” The central bank reported on Monday that some $2.3 billion of funds were remitted in May, up 5.5 percent year-on-year. The January to May remittances went up by 4.5 percent to $11.3 billion. The Philippines in the meantime reported a 23 percent increase in trade deficit in May to $2.75 billion from April’s $2.24 billion, mainly because of higher imports for the manufacturing sector. The peso has averaged at 150 in the first quarter versus the 149 average at the end of 2016. It has continued to depreciate because of several factors such as the US Federal Reserve rate hike in March, the market expectation of additional rate increases this year, and the strong US dollar requirement by domestic companies. Bangko Sentral ng Pilipinas (BSP) Governor Nestor A. Espenilla Jr. has said that they continue to be on guard and prepared to step in the market to manage exchange rate volatility. The BSP does not target an exchange rate and instead allow market forces to determine the value of the peso vis-à-vis the greenback, but would intervene to smoothen sharp fluctuations. (Lee C. Chipongian)