THE PESO weakened anew on Thursday on risk-off sentiment after the steep drop in April cash remittances, which was the worst in nearly two decades.

The local unit closed at P49.535 per dollar on Thursday, shedding 5.5 centavos from the P49.48 finish the day prior, data from the Bankers Association of the Philippines showed.

The peso opened the session at P49.49 per dollar, which was also its intraday best. Meanwhile, its weakest showing was at P49.60 against the greenback.

Dollars traded increased to $768.49 million from the $563.8 million logged on Wednesday.

The local unit’s depreciation came on the back of the deeper contraction in remittances from overseas Filipino workers, said Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort.

“The peso was slightly weaker but still in its strongest levels in more than three years after the weaker OFW remittances data,” Mr. Ricafort said in a text message.

Data from the Bangko Sentral ng Pilipinas (BSP) released Wednesday showed cash remittances sank 16.2% year-on-year to $2.046 billion in April from the $2.29 billion logged a year ago. The drop is the worst since the 33.5% contraction recorded in January 2001.

Year-to-date inflows also decreased 3% to $9.448 billion as of April against the $9.739 billion seen in the first four months of 2019.

The BSP blamed the decline on the unexpected repatriation of OFWs due to the pandemic. More than 88,000 Filipinos have been repatriated as of mid-July.

Meanwhile, a trader attributed the peso’s weakness to market worries on brewing US-China tensions.

“The peso depreciated from safe-haven demand after China hinted about imposing sanctions against specified US entities and individuals,” the trader said in an email.

China threatened to impose sanctions as US President Donald J. Trump approved an executive order to end preferential economic treatment for Hong Kong in response to Beijing’s imposition of a controversial security legislation on the special administrative region, Reuters reported.

“No external force can block China’s determination and confidence to maintain national sovereignty and security for Hong Kong’s long-term prosperity and stability,” Beijing’s Liaison Office in Hong Kong said in a statement.

For today, Mr. Ricafort and the trader gave a forecast range of P49.45 to P49.65 per dollar. — LWTN with Reuters