THE PESO plunged versus the dollar on Monday due to weak data.

THE PESO plunged to a fresh low against the dollar on Monday, closing near P53 due to a wider trade deficit and lower foreign exchange reserves amid geopolitical tensions overseas.
The local unit closed Monday’s session at P52.95 against the dollar, weaker by 25 centavos from the P52.70-per-dollar finish on Friday.
This is a new low for the peso as this is its worst finish in more than 12 years or since it closed at P52.98 against the greenback on July 3, 2006.
The peso immediately slid against the greenback as it opened the session opened at P52.80 versus the greenback, which was already its best showing for the day. Meanwhile, its intraday low stood at its P52.95-per-dollar close.
Dollars traded dropped to $653.1 million Monday, June 11, from the $724.2 million that switched hands on Friday.
In a text message, Rizal Commercial Banking Corp. Economics and Industry Research Division Head Michael L. Ricafort attributed the weakening of the peso to data showing a wider trade deficit recorded in April as well as lower foreign reserves.
The country’s trade deficit widened to $3.616 billion in April from the $1.554 billion logged a year ago, the Philippine Statistics Authority announced on Friday.
Exports declined to $5.11 billion in April by 8.5% from the same period last year, while the country’s imports surged 2.22% year-on-year to $8.729 billion during the month.
“Wider trade deficits tend to weaken the peso exchange rate, fundamentally due to more net imports and outflows of foreign exchange [or] US dollars to pay for imports sources from suppliers overseas,” Mr. Ricafort explained.
He added that the lower gross international reserves (GIR) of the country “also weighed down on the peso sentiment recently.”
Last week, the Bangko Sentral ng Pilipinas said the country’s dollar reserves dropped to a three-year low of $78.968 billion in May as the central bank used the stash to temper sharp swings in the exchange rate, and amid higher gold valuations and debt payments.
Mr. Ricafort noted that the market continued to react to data released last week.
Meanwhile, a trader said the peso “depreciated heavily” following the outcome of the Group of 7 summit over the weekend.
“The peso again depreciated heavily today following the unfavorable outcome of the G-7 summit over the weekend,” the trader said in an e-mail on Monday.
US President Donald J. Trump announced he was backing out of the G-7 communique after he left the summit in Canada, calling Canadian Prime Minister Justin Trudeau “dishonest and weak” following his press conference.
The trader added that the local unit depreciated due to the “uncertainties in the market” ahead of the summit between Mr. Trump and North Korean leader Kim Jong-un in Singapore to discuss denuclearization as well as peace in the Korean peninsula.
Local financial markets are closed Tuesday, June 12, in observance of the country’s Independence Day. — Karl Angelo N. Vidal

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