Peso weakens on PHL trade data

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THE PESO depreciated against the dollar on Tuesday after local data showed a wider trade deficit.

The local currency ended Tuesday’s session at P53.46 against the greenback, six centavos weaker than its P53.40-per-dollar finish on Monday.

The peso opened the session flat at P53.40. It slipped to P53.51 versus the US currency within the day, while its best showing stood at P53.35.

Dollars traded slipped to $616.4 million from the $620.2 million tallied the previous day.

“The peso fell [Tuesday] following the release of wider local trade deficit for May,” a trader said in an e-mail.

The country’s trade deficit widened to a five-month high in May on the back of smaller exports and bigger imports, data from the Philippine Statistics Authority revealed.

The country’s exports declined 3.8% in May from the same period last year, a reversal from its 24% growth in 2017.

Meanwhile, total imports grew 11.4% year-on-year, although slower than the 20.2% expansion tallied in a comparable year-ago period.

This resulted in a $3.7-billion trade deficit in May which widened from April’s revised deficit of $3.48 billion.

“The US dollar has slightly strengthened and the May trade data release may have had a considerable impact on the peso,” UnionBank of the Philippines Chief Economist Ruben Carlo O. Asuncion said in a text message.

He added the wider trade deficit caused “perception that the peso may further weaken.”

Michael L. Ricafort, economist at Rizal Commercial Banking Corp. noted in a separate message that the trade deficit data came after last week’s gross international reserves data at a six-year low of $77.7 million.

For Wednesday, the trader sees the peso to move between P53.35 and P53.55, while Mr. Asuncion gave a P53.30-P53.50 range.

“The local currency is expected to weaken further [on Wednesday] on expectations of firm US producer prices data,” the trader added. — Karl Angelo N. Vidal