THE PESO slipped further against the dollar on Tuesday due to continued risk-off sentiment in the market due to concerns over the Turkish economy.
The local unit closed Tuesday’s session at P53.39 versus the greenback, two centavos weaker than the P53.37-per-dollar finish on Monday. This is the peso’s weakest closing rate in nearly three weeks since it closed at P53.435 against its US counterpart on July 26.
The peso traded weaker the whole day, opening the session at P53.50 per dollar. It slid to an intraday low of P53.51, while its best showing for the day was its closing rate.
Dollars traded declined to $693 million from the $786.4 million that switched hands the previous day.
A trader said on Tuesday that the peso continued to weaken as fears about the Turkish economy caused investors to be cautious.
“The local currency still closed weaker as Turkey contagion fears persistently put some risk-off sentiment in the [foreign exchange] markets,” the trader said in an e-mail.
Reuters reported that the Turkish lira tumbled to a record low, weakening as much as 13.34%, over concerns about Turkish President Tayyip Erdogan’s rigid control over the economy fuelled further by worsening relations with the United States.
Mr. Erdogan, who has called himself the “enemy of interest rates,” wants cheap credit from banks to fuel growth, sparking concerns that the economy might overheat and could be set for a hard landing.
To quell concerns, the Turkish central bank pledged to provide liquidity by cutting currency reserve requirements for domestic banks to free up $6 billion and additional $3 bullion equivalent of gold liquidity into the financial system.
“However, it must be noted that as the peso [weakened] in the open, investors started taking profits on the dollar’s strength in the intraday trade,” the trader said.
Still, UnionBank of the Philippines Chief Economist Ruben Carlo O. Asuncion noted that emerging market currencies were still “stronger” across the board following the Turkey fallout on Monday.
For Wednesday, the trader expects the peso to move between P53.25 and P53.45 versus the dollar, while Mr. Asuncion gave a P53.20-P53.50 forecast range.
“The peso will likely strengthen [on Wednesday] as US retail sales and industrial production data might come mixed from previous readings,” the trader noted. — K.A.N. Vidal with Reuters

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