Peso slips as risk-off sentiment rules

THE PESO weakened slightly versus the dollar on Tuesday as risk-off sentiment prevailed due to geopolitical concerns in Europe.
The local unit ended Tuesday’s session at P53.815 against the greenback, 2.5 centavos lower than the P53.79-per-dollar finish on Monday.
The peso traded weaker the whole day, opening the session at P53.88 against the dollar. Its intraday low stood at P53.92, while its best showing stood at P53.795 versus the greenback.
Dollars traded declined to $711.9 million from the $863.4 million that exchanged hands the previous day.
A foreign exchange trader said the peso traded generally weaker during Tuesday’s session due to the stronger dollar overnight.
“For the dollar, it was more of a risk-off tone due to the headlines regarding Brexit and Italy,” the trader said in a phone interview.
In a report from Reuters, British Prime Minister Theresa May said on Monday most of UK’s deal to exit the European Union has been agreed on, although she insisted her opposition to Brussels’ proposal regarding the Irish border.
Meanwhile, the trader added that investors are still concerned about the political uncertainty over Italy’s spending plans, as global debt watcher Moody’s downgraded Rome’s credit rating but kept its outlook to “stable.”
Union Bank of the Philippines chief economist Ruben Carlo O. Asuncion added that the geopolitical tensions between Saudi Arabia and the West over the death of journalist Jamal Khashoggi, resurfacing trade war concerns as well as other worries on the domestic front, among others, added to the slew of negative drivers in the market yesterday.
These concerns dampened risk sentiment among market players, causing them to flock to safer currencies such as the dollar.
In the afternoon session, the trader said the peso rebounded against the dollar as the effect of these geopolitical concerns subsided in Asian trade.
“I think it already subsided so the dollar traded weaker again and then the peso rebounded as it closed near its intraday high,” the trader added.
For Wednesday, the trader expects the peso to move between P53.75 and P53.85 against the dollar, while Mr. Asuncion gave a P53.60-P54 range. — Karl Angelo N. Vidal