THE PESO closed lower against the dollar on Friday, breaching the P51-to-the-dollar level intraday, amid escalating tensions between the United States and North Korea.
The peso closed at P50.98 against the dollar on Friday, slumping 18.5 centavos from Thursday’s finish of P50.795.
Yesterday’s close was the lowest for the peso in nearly 11 years. It ended at P51.05 to the dollar on Aug. 29, 2006.
The peso was weaker the entire day, opening the session at its peak of P50.90, later breaching the P51 level to P51.08 at its lowest intraday against the dollar.
Trading volume on Friday was $690.1 million, against $692.55 million in the previous session.
Prior to the close of yesterday’s session, Bangko Sentral ng Pilipinas (BSP) Governor Nestor A. Espenilla, Jr. said: “We’re constantly monitoring peso developments for excessive short-term volatility not consistent with underlying economic fundamentals and take appropriate action when necessary. We recognize that the market is also often self-correcting.”
Meanwhile, traders attributed the weaker peso to persistent tensions between the US and North Korea.
“The peso remained weak today due to geopolitical concerns involving the US and North Korea,” one trader said by e-mail on Friday.
Another trader said, “It’s still the tensions between North Korea and the US, and everything that’s happening there causes risk-off sentiment among traders, leading markets to resort to safe-haven assets such as the dollar, the yen and even gold.”
US President Donald J. Trump threatened North Korea with “fire and fury” after Pyongyang announced it is making plans to target Guam, suggesting a flight path over US ally Japan.
Meanwhile, one trader said corporate demand also drove the peso lower.
“There is still demand for dollar-peso from companies, but I think the market is still dominated by risk-off sentiment,” the trader said. – Janine Marie D. Soliman