THE PESO dropped on Wednesday, retreating to the P52 level, as the dollar strengthened across a band of currencies.
The local currency closed yesterday’s session at P52.015 against the greenback, 16.5 centavos weaker than the P51.85-per-greenback finish on Tuesday.
The peso traded weaker the whole day, opening the peso at P52 against the US currency. It slipped to as low as P52.055, while its best showing for the day stood at P51.95.
Dollars traded inched up to $733.9 million from Tuesday’s $727 million.
Traders interviewed Wednesday said the peso slid as it tracked the weakness of other currencies against the dollar.
“The peso was just keeping in track with the global dollar move as it strengthened overnight,” a currency trader said over the phone.
Another trader said the market has been “seeing a broad-based US dollar up-move,” although it was contained in the dollar-peso exchange.
“We’re moving down, but the peso was resilient compared to the other Asian currencies. I guess one of the reasons why is that market players continue to hike rates tomorrow,” the trader said.
Investors are on a wait-and-see stance ahead of the Bangko Sentral ng Pilipinas’ monetary policy meeting today.
In a BusinessWorld poll, nine out of 11 economists said the monetary authority will likely hike benchmark rates as inflation hit multi-year highs in the previous months.
“We’ll see how it goes [on Thursday],” the trader said, adding that the market is also anticipating gross domestic product (GDP) growth data to be announced today.
The trader also noted that data showing a wider trade deficit released Wednesday did not affect the currency exchange.
“Not really. In a way it should, but when it was announced, we were just trading within the same band.”
The country’s trade deficit widened anew in March as exports slumped. The balance of trade in goods expanded to a $2.61 billion deficit in March, wider than the $2.1 billion deficit recorded in March last year.
“But if you look at it in a medium-term, if we continue to see the trade deficit improve, I guess we can see the peso [strengthen].”
For today, the first trader sees the peso moving between P51.95 and P52.10 versus the dollar, while the other gave a lower P51.90-P52.10 range.
Meanwhile, a third trader said: “The peso is expected to appreciate as investors will likely shift their focus to the local GDP growth report.”
The trader expects the peso-dollar rate to move between P51.80 and P52.20. — K.A.N. Vidal