Peso weakens on safe-haven dollar demand
THE PESO went down against the dollar on Wednesday on safe-haven demand for the greenback due to concerns over the US financial sector and economy.
The local currency closed at P55.62 versus the dollar on Wednesday, declining by eight centavos from Tuesday’s finish of P55.54, data from the Bankers Association of the Philippines’ website showed.
The local unit opened Wednesday’s session at P55.57 per dollar. Its worst showing was at P55.71, while its intraday best was at P55.54 versus the greenback.
Dollars traded went down to $1.23 billion on Wednesday from the $1.27 billion recorded on Tuesday.
The peso appreciated “after the recent slight upward correction in the gauge of the US currencies versus major global currencies,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
The dollar strengthened “after mostly softer-than-expected US economic data lately… [and as] First Republic Bank stock price declined by 49% after disappointing earnings, rekindling fears over the health of the US banking sector,” Mr. Ricafort said.
The dollar was generally stronger overnight, a trader said likewise in a Viber message.
The US dollar and the yen were steady on Wednesday, holding onto overnight gains as concerns over the US banking sector and economy hit sentiment, while the Australian dollar slid after easing inflation suggested less pressure to raise interest rates, Reuters reported.
The dollar index, which measures the currency against six major rivals, nudged 0.01% higher to 101.80 after a 0.5% increase overnight. The index is down 0.76% for the month.
Shares of First Republic Bank slid nearly 50% on Tuesday after it reported a more than $100-billion plunge in deposits in the quarter, battered by lost confidence in the banking sector.
It faces dwindling and tough options to turn around its business with the creation of a “bad bank” or asset sales possibilities, a source familiar with the matter told Reuters.
Also weighing on sentiment was fresh economic data. US consumer confidence dropped to a nine-month low in April, data overnight showed, heightening the risk that the economy could fall into recession this year.
The US Richmond Fed manufacturing index slid as well, down to -10 in April, the fourth straight month of contraction.
For Thursday, the trader sees the peso trading between P55.25 and P56 against the dollar, while Mr. Ricafort expects it to move from P55.50 to P55.70. — AMCS with Reuters
