THE PESO sank to a fresh one-month low on Tuesday as the dollar strengthened on the back of higher US Treasury yields.
The local currency ended Tuesday, Apr. 24 session at P52.32 against the greenback, weaker by eight centavos from its P52.24-per-dollar finish on Monday.
This is also the peso’s weakest showing since closing at P52.39 exchange rate on March 23.
It traded weaker the whole day as it opened the session at P52.355 versus the US currency. It dipped to as low as P52.365, while its best showing for the day stood at P52.25.
Dollars traded dropped to $620.21 million from the $757.2 million that switched hands on Monday.
Two traders said the peso weakened as the dollar grew stronger overnight due to the rising US Treasury yields.
“The peso again lost its strength against the dollar, having boosted from increased US bond supply as the US Treasury continue to offer debt securities,” a trader said in an e-mail.
In a report from Reuters, early Tuesday (Manila time), the dollar strengthened against a basket of currencies as the US 10-year Treasury yield hit a four-year high at 2.998% on Monday, nearing the psychological 3% level.
“The US 10-year Treasury is close to 3%. It’s not broken, but we’re moving closer to 3%. As a result, the dollar strengthened across,” another trader said in a phone interview, adding that the local currency reacted “fairly slow” with the news compared with the other currencies.
The currency trader also noted that there was some selling during the morning session.
“Not really sure why, but most probably, [investors] took profits from going long during the previous days. In the afternoon, there was buying interest again.”
The second trader sees the peso to move between P52.25 and P52.40 Wednesday, Apr. 25, while the other expects the local currency to trade within the P52.05-P52.45 range.
“The peso might still weaken as investors position ahead of initial US [gross domestic product] data to be released on Friday,” the first trader said.
Most other emerging Asian currencies also weakened on Tuesday as rising US bond yields boosted the dollar, dampening interest in riskier assets. — K.A.N. Vidal with Reuters