Peso closes at new 7-year low

The unabated pullout of funds due to external shocks and negative investor sentiment continued to drag down the peso, shedding another eight centavos against the dollar yesterday.

The peso hit a new seven-year low after it closed at 48.33 from Wednesday’s 48.25 to $1. This was the weakest since Sept. 16, 2009 when the peso stood at 48.356.

The peso opened stronger at 48.19 and hit an intra-day high of 48.15 before losing steam and reach an intra-day low of 48.35 to $1. Trading volume reached $ 583.5 million, higher than Wednesday’s $441.2 million.

Investor confidence has been shaken after President Duterte lashed out at US President Barack Obama, UN Secretary General Ban Ki-moon, and the European Union for meddling in the government’s all-out battle against illegal drugs that have claimed the lives of about 3,000 alleged drug pushers and users.

Last Tuesday, President Duterte even accused the US of “manipulating” the exchange rate resulting in the continued weakness of the peso against the greenback.

BSP Deputy Governor Diwa Guinigundo said global shocks are driving the movement in the financial markets particularly the stock and foreign exchange markets.

“There are many idiosyncratic factors that are at work so it is very difficult at this point to attribute that to a single event or a statement of any politician of anyone at this point,” he said.

According to him, investors are looking past the country’s strong macroeconomic fundamentals characterized by the 70 straight quarter of positive gross domestic product (GDP) growth and benign inflation.

“I’ve been telling you before that both the equities market and the foreign exchange market are driven both by fundamentals and sentiments. As far as fundamentals are concerned I think there are outstanding fundamentals but then the sentiment is something else,” he said.

Guinigundo said sentiment is driven both by external as well as domestic factors.

“Of course there are statements that are being attributed to the President but it is difficult to say that this happening because of what he is saying. I mean he is saying rhetorics and rhetorics do not translate into policies,” he said.