Peso sinks to one-month low vs dollar

By Melissa Luz T. Lopez, Senior Reporter
THE PESO plunged to a one-month low Monday, Apr. 23 as the dollar gained strength, propped up by rising bond yields in the United States and easing tensions over a trade war with China.
The local unit closed at P52.24 versus the greenback on Monday, 14.5 centavos weaker than Friday’s P52.095 finish. This is the peso’s weakest showing since closing at P52.32 exchange rate on March 27.
The peso traded generally weaker throughout the session as it opened at P52.13 versus against the dollar. It touched P52.12 as its strongest point but also hit a peak of P52.26 before settling at the closing rate.
Sought for comment, two traders said the peso mirrored a depreciation trend seen with other Asian currencies compared to the dollar, fuelled by positive developments in the US.
“The peso dipped strongly [Monday, Apr. 23] due to recent rise in US yields and on news of possible visit to China by US Finance Secretary (Steven) Mnuchin to discuss trade concerns between China and the US,” one trader said via e-mail.
Reuters reported that most emerging Asian currencies slipped during trading as yields for the 10-year US Treasury bonds soared to a four-year high and provided support to the greenback. Most currencies weakened versus the dollar except the Chinese yuan, while the peso remained the worst-performing unit so far this year.
Meanwhile, US Treasury Secretary Steven Mnuchin’s announcement that he may visit Beijing to discuss trade practices, a move seen to allay fears over a looming trade war between the world’s biggest economies.
Concerns over the trade war continued to feed into market sentiment, with latest developments turning out in favor of the greenback.
A second trader pointed out a “stronger appetite” to trade currencies on Monday. Dollars traded amounted to $757.2 million Monday, Apr. 23, double the $329.5 million which exchanged hands last Friday.
“The market likely took positions ahead of US GDP (gross domestic product) data,” the trader said, noting that the peso is likely to weaken further over the coming days.
The US is due to report initial data on first-quarter economic growth, a key indicator which could dictate the pace and timing of future rate hikes from the Federal Reserve. This, in turn, will influence global yields.
Both currency traders expect the local currency to drop versus the dollar anew. The first trader sees the peso trading within P52.10 to P52.35, while the other expects currency movements to log within the P52.15-P52.35 range.